2015 SUSTAINABILITY REPORT We choose_ to grow solidly and sustainably MESSAGE FROM MESSAGE FROM 1. TELEFÔNICA 2. CORPORATE 3. RESPONSIBLE 4. COMMITMENT TO 5. EDUCATING 6. EMPLOYEES 7. SUPPLY 8. COMMITMENT TO 9. APPEN- 2015 SUSTAINABILITY REPORT THE PRESIDENT THE PRESIDENT VIVO TODAY GOVERNANCE BUSINESS SOCIETY CUSTOMERS CHAIN THE ENVIRONMENT DICES OF TELEFÔNICA OF TELEFÔNICA GLOBAL BRASIL
Introduction_
In publishing this this this sustainability report, Our value propositions Telefônica Brasil presents an account of its 2015 activities in Brazil and offers its management a tool to guide it along the road of sustainability.
This report, produced through the involvement Society Employees Shareholders and of the Company's several divisions, introduces our Apply technologies in Promote professional Investors stakeholders to the main highlights challenges support of socio-economic development, offer fair Maintain a responsible related to corporate performance rooted in transformation through salaries and ensure respect business, with profitability sustainability principles. entrepreneurship, education, for human rights. and sustainability. culture and solidarity. The content, oriented toward the continuous improvement in the quality of information presented, seeks to demonstrate the connection between strategy, management, activities, results and goals mainly from the standpoint of the Customers Suppliers Environment three, most significant aspects of sustainability – Provide quality services with Increasingly share benefits Through our products and economic, social and environmental – in addition excellent connectivity and, generated throughout the services, contribute to a to highlighting the cultural perspective, which through integrated offers, value chain. low-carbon economy and, Company management considers to be relevant. provide differentiated access through steady management to and experience of the of our impacts, reduce our digital world. environmental footprint. Important
All indicators were consolidated in consideration of 2015 data from Telefônica Brasil and GVT. It is noteworthy that financial data includes proforma results for GVT through April and consolidated as from May, as was reported in Telefônica Brasil S.A.'s 4Q15 A value proposition is what the company can results. generate in the way of benefits to its stakeholders Learn more at www.Telefônica.com.br through its products and services. 2015 SUSTAINABILITY REPORT
Telefônica Vivo Corporate Responsible Commitment to Summary 1 today 2 governance 3 business 4 society 09 Profile 19 Governance 26 Trends 38 Universalization of model services 10 Our Business 27 Our strategy 21 Contribution 39 Critérios para seleção 12 Connections to progress 28 Our business model de locais de instalação 04 Message from 13 Economic and financial 29 Materiality and stakeholder 40 Circular economy President of highlights engagement Telefônica Global 41 Improving the quality 14 Non-financial data 30 Risk management of life for children and 06 Message from 15 Commitments 31 Sustainability young people the President of Telefônica Brasil 17 2015 highlights Recognition 33 Ethics and compliance 42 Contribution to social and cultural activities 34 Innovation 45 Preparedness and disaster response
Educating Commitment to the 5 customers 6 Employees 7 Supply chain 8 environment 9 Appendices 48 Quality plan 58 Our team 67 Suppliers 70 Environmental 78 Principles for the management system preparation of this 50 Shops 58 Workplace health 68 Mining in conflict report and safety zone 71 Responsible network 50 Inclusion 79 GRI Summary 59 Diversity 72 Energy 51 Responsible use 85 Letter of Assurance 61 Attracting, training and 73 Climate change 52 Digital trust retenting talent 87 Credits 74 Life cycle analysis 54 Security 65 Workplace climate 74 Water 55 Privacy 65 Volunteer program 75 Waste 76 Electromagnetic fields
CODES FOR NAVIGATING THIS DOCUMENT ALL DEVICES MORE INFORMATION The 2015 Sustainability Report is Find out further available online for smartphones information and Previous Next Summary and tablets (interactive PDF and videos page page downloadable versions). MESSAGE FROM MESSAGE FROM 1. TELEFÔNICA 2. CORPORATE 3. RESPONSIBLE 4. COMMITMENT TO 5. EDUCATING 6. EMPLOYEES 7. SUPPLY 8. COMMITMENT TO 9. APPEN- 2015 SUSTAINABILITY REPORT THE PRESIDENT THE PRESIDENT VIVO TODAY GOVERNANCE BUSINESS SOCIETY CUSTOMERS CHAIN THE ENVIRONMENT DICES OF TELEFÔNICA OF TELEFÔNICA GLOBAL BRASIL
VALUED SHAREHOLDERS1, total. This explains why we are talking about a very different Telefônica, where the core of our It is a great honor to address you for the first business is connectivity. time as president of Telefônica. I want begin by expressing my deepest gratitude and We live in a context of constant technological appreciation to Cesar Alierta, my predecessor. advancement, which has no historical precedent. 9.6 BILLION Thanks to his vision, Telefônica is today a world Digitalization is transforming everything at a leader, an example of success, leadership, breakneck pace and, as we move into the future, euro invested growth and profitability. will do so at an even greater pace. The scope of technology has grown exponentially and its in technological My goal is to continue to contribute to the spread, at this accelerated speed, is advancing success story that is Telefônica and carry on into every corner of the world. improvements the digital transformation of this company. To achieve this, I have the best team in the Telecommunications companies are in the MORE THAN industry: all the professionals who are part of middle all this change, as connectivity is a part this great company. of everyone's life, and, with each passing day, we are more and more dependent on it. At 2015 was key to paving the way toward Telefônica, we're certain that a digital life is a profitable and sustainable growth for the long longer life and that technology is a essential part José María Álvarez-Pallete term, while improving our competitive position 47BILLION President of Telefônica SA in our core strategic markets in Europe and Latin America – Spain, Germany and Brazil. euro in net revenue in 2015 By the end of 2015, we were serving 322 million customers in the countries where we operate, and had increased our base of fiber customers by 30%, tripled Long Term Evolution (LTE), and increased our smartphone and pay TV customers by 29% and 12%, respectively. (1) This is an edited version. To read the full text, please "We live in a context of constant technological visit: www.telefonica.com/es/web/ sostenibilidad/ It is also worth noting that for the first time in informe-de-sostenibilidad/2015. advancement, unprecedented in history. Digitalization The information provided herein refers to the Group's our history the entry of traditional (voice access) worldwide operations, not only those in Brazil. customers represented less than 50% of the is transforming life at a breakneck pace."
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Finally, Telefônica believes in promoting a "Telefônica believes in promoting a responsible business responsible business model, which is able model, capable of generating confidence in our customers, to generate confidence in our customers, investors, employees and shareholders, and % investors, employees and shareholders, and throughout throughout society as a whole. 29 growth society as a whole." This trust becomes more relevant in a new digital world. A world where traditional channels are superseded and new rules and in mobile of being human. We facilitate connections that new values are needed. give people the ability to choose from a world of telephony endless possibilities. This is our reason for being I appreciate all the support and trust I have and, by placing our focus on people, it inspires us received, especially in this new phase and 30% to transform ourselves into an OnLife Telco. exciting moment. I have no doubt that together we will continue to make Telefônica growth Our company has always been characterized by a great company and that every day will be in fiber its strong commitment to societal development about which we can take increasing pride. 12% and progress. It's a commitment that goes beyond the direct and indirect impacts of our Thank you, G4-1, G4-15 growth customers business in creating wealth in a given country – investment, employment generation and tax in pay TV contributions over the years have materialized José María Álvarez-Pallete through various programs and initiatives. President of Telefônica SA
I would also like to highlight the company's focus, via the Telefônica Foundation, on digital 115 education, which has positioned us as the MILLION third-ranked company in the world in terms of educational investing. We know that education euro invested in is the most powerful tool for reducing inequality social and cultural and expanding the foundations for sustained activities growth of society.
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DEAR FRIENDS, benefits, which reflect our commitment to 2015 was marked by the strengthening of development. Vivo as a leader in Brazil's telecommunications sector, where the synergies between In economic terms, in addition to the intrinsic Telefônica Brasil and GVT were maximized. advantages of telecommunications, we 2015 The achievements of the integration process have projects to encourage innovation and are relevant and should be celebrated. We entrepreneurship that will foster a new A year of synergy can proudly say that we are already a unified generation of business leaders and open company, working as a single team. doors for ideas with the potential to enrich A new Vivo is born to lead the our portfolio. market in digital age The integration of our companies solidifies a high-performance culture that places the In the social sphere, Telefônica's global customer as the central focus of what we have commitment is to contribute to improving to offer – excellent quality services that enable quality of life through educational projects a unique experience of the digital world. that use technology as a learning tool and social investments and sponsorships focused Also in 2015, we set forth a new strategy, on culture, with an emphasis on regional 4.5 which aims at transforming the company to initiatives. MILLION be more relevant to customers, generating Amos Genish increased value for shareholders, and having potential customers President of Telefônica Brasil highly engaged employees. The strategy for mobile connectivity was christened "We Chose to Reinvent, We and fixed broadband Want It All" (Escolhemos Tudo, Escolhemos services Reinventar) and is supported by three pillars – Customer Focus, Sustainable Business Model and High Performance Culture.
To be recognized as a benchmark sustainable company is among the objectives of this "Our global commitment is to contribute to new positioning. Therefore, in addition improving quality of life using technology as a social to connecting people, our activities must generate economic, social and environmental transformation tool."
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(ISE).Moreover, for the third consecutive "To be a benchmark for sustainability, we need to year, we were featured in Exame magazine's Sustainability Guide. We also reaffirmed our rd deliver superior services." commitment to the principles of the UN Global Compact, of which we have been a signatory since 2010. 3 consecutive year in None of our achievements would be possible Exame magazine's without our employees, with whom we seek to share the value we generated in Sustainability the best possible way – fair compensation TWe are also committed to respecting the and offering opportunities for professional Guide environment, contributing through products growth. and services that deliver more connectivity and R$ 41 enable, in many respects, an eco-efficient and We believe we're on track and we know MILLION low carbon economy. there's still much to accomplish. In this th mission, we rely on the support of our invested in social However, we know, first of all, we need to employees, partners and investors. You'll find 4 deliver superior services. We'll continue more information in this report about them, projects expanding our coverage in 4G and fiber optic what we're doing together and what is to consecutive year networks, and will seize opportunities to come in this new moment for Telefônica. connect even more people to our networks in (2016) in BM&FBovespa's Brazil. Our complete portfolio – which includes Here's wishing you all good reading! Corporate Sustainability broadband, fixed voice and mobile telephony, G4-1, G4-15 Index (ISE) as well as pay TV and digital services – enables us to achieve an integrated and transparent 2010 set of offerings, capable of satisfying customer Amos Genish the year we became preferences and winning their confidence. President of Telefônica Brasil
a signatory to the The positive performance of the company principles of the UN along its various fronts enabled our inclusion, Global Compact for the fourth consecutive year, in the the BM&FBovespa Corporate Sustainability Index
7 2015 SUSTAINABILITY REPORT MESSAGE FROM MESSAGE FROM 1. TELEFÔNICA 2. CORPORATE 3. RESPONSIBLE 4. COMMITMENT TO 5. EDUCATING 6. EMPLOYEES 7. SUPPLY 8. COMMITMENT TO 9. APPEN- THE PRESIDENT THE PRESIDENT VIVO TODAY GOVERNANCE BUSINESS SOCIETY CUSTOMERS CHAIN THE ENVIRONMENT DICES OF TELEFÔNICA OF TELEFÔNICA GLOBAL BRASIL
Telefônica Vivo 1_ today
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Profile_
G4-3, G4-6, G4-7, G4-8, G4-9, G4-13, GVT Visão G4-23, G4-56 Excellent connectivity Telefônica Brasil is Brazil's largest Values Customer Experience telecommunications company and Grupo Digital life is life itself, and technology is Bundled Offer Telefônica's principal enterprise in Latin an essential part of being human and guided by high America, one of the more important performance and telecommunications, information and Telefônica the principles of We want to create, protect and entertainment clusters in the world. Brasil sustainability boost connections in life so people can choose a world of unlimited Strengthened in 2015 by the acquisition of GVT, possibilities. the company operates today as a completely integrated company with national presence and We operate in Brazil since 1998 absolute leadership in the telecom market. It offers the best in mobile and fixed telephony, VALUES mobile and fixed internet, pay TV, as well as MORE THAN MORE THAN digital services and solutions for businesses. The company is committed to generating value Are represented in all our activities and are for its stakeholders, further investing in quality, 3,975 33,000 divided into: innovation and sustainability. 97 MILLION CITIES RELIABILITY: Reliable, honest and simple. The results from the synergies arising from the customers served employees The best network, which offers security union between Vivo and GVT are included in this for the customer. Excellence in execution, (total connections in December 2015) publication. the best quality. Trustworthy and credible. Straightforward and easy to understand.
Telefonica Revenues of Over OPEN: Collaborative, transparent, Worldwide close and courteous. In the business model and the relationship 47.2 16 322 129,000 with the customer. BILLION million 000 CHALLENGING: Disruptive, visionary, euros countries user accesses employees innovative, agile, restless and transformative. Always a step beyond what is expected of us.
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Our Businesses_ G4-4
TOTAL CUSTOMER BASE Voice Millions
Cloud and IT 100
1 97.2 80 95.4 4G 92.5 7 2 60 Telefônica 40 20 Security Brasil Ultra-Broadband 6 3 0 2013 2014 2015
5 4 CONNECTIONS BY SERVICE Apps HDTV Millions Mobile Fixed
77.2 15.3 79.9 15.4 73.3 23.9
624,000 12,100 28.4% 302 company- recharge Points- Mobile owned locations of-sale market share stores (revenda e varejo)
2013 2014 2015 10 MESSAGE FROM MESSAGE FROM 1. TELEFÔNICA 2. CORPORATE 3. RESPONSIBLE 4. COMMITMENT TO 5. EDUCATING 6. EMPLOYEES 7. SUPPLY 8. COMMITMENT TO 9. APPEN- 2015 SUSTAINABILITY REPORT THE PRESIDENT THE PRESIDENT VIVO TODAY GOVERNANCE BUSINESS SOCIETY CUSTOMERS CHAIN THE ENVIRONMENT DICES OF TELEFÔNICA OF TELEFÔNICA GLOBAL BRASIL
CUSTOMERS MOBILE SERVICE CUSTOMERS FIXED SERVICE CUSTOMERS POSTPAID MARKET SHARE Millions Millions Millions % 0.6p.p
50
40
Total Total Total 4,.4 41.8 97.2 M 73.3 M 23,9 M 30
20
10
Mobile service Fixed service Prepaid Postpaid Pay TV Fixed voice 0 73.3 23.9 42.2 31.1 1.8 15.0 2014 2015 Broadband BROADBAND CUSTOMERS PAY TV CUSTOMERS 7.1 Millions Millions
8 2,0 7,1 7 6,8 1.8 6 3.3 1,5 3.5
5 1.62
4 1,0
3 3.8 We distinguish the company in the market with 3.3 2 0,5 our strategy, which is supported by three pillars 1
0 0 – Customer Focus, Sustainable Business 2014 2015 2014 2015 Model and High Performance Culture. Broadband FFTX (fiber)
Other broadband 11 MESSAGE FROM MESSAGE FROM 1. TELEFÔNICA 2. CORPORATE 3. RESPONSIBLE 4. COMMITMENT TO 5. EDUCATING 6. EMPLOYEES 7. SUPPLY 8. COMMITMENT TO 9. APPEN- 2015 SUSTAINABILITY REPORT THE PRESIDENT THE PRESIDENT VIVO TODAY GOVERNANCE BUSINESS SOCIETY CUSTOMERS CHAIN THE ENVIRONMENT DICES OF TELEFÔNICA OF TELEFÔNICA GLOBAL BRASIL
Connections_
The nearest antenna CELL PHONES picks up the signal transmitted by the The signal is sent device Each time you to a switching and use your cell control center phone to speak that routes the with someone transmission to the or access the desired destination, A cell phone internet which can be:
Each time The signal is transmitted you use a through cables that landline connect the entire system together
Mobile phones can communicate A landline directly with each other or access the internet without the need to go through a switching center. A signal simply needs to be within range of a base station Each time you access the antenna (learn more on p. 32). The internet at home with greater the number of base stations, the your computer greater the signal coverage and the less chance of network congestion due to excessive hits.
The internet
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Economic and financial highlights_
NET REVENUE DISTRIBUTION R$ Million Financial Data: Telefônica Brasil (R$ billion)2 2014 2015 % 7.7 Gross operating revenue 62.1 64.3 Total 42.1 growth in net revenue Net operating revenue 40.2 42.1 from broadband Net income 5.2 3.3 Mobile service Fixed service 25.1 17.0
EBITDA 12.3 12.7 27.6 % growth in net EBITDA margin (%) 30.6 30.2 revenue from 16.3 % pay TV Net debt 7.1 4.6 growth in Ultra Investments (including licenses) 11.2 8.3 Broadband-
UBB or FTTx (2) Includes proforma results for GVT through April and consolidated as from May, as was disclosed in the press release regarding the fourth quarter results of Telefonica Brazil SA. For comparison purposes, we present the combined, proforma scenario, which includes GVT Holdings SA as from January 1, 2014.
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Non-financial data_
Economic3 2014 2015 Social 2014 2015
Locally contracted suppliers (thousands) 2.03 2.05 Employees 18,419 33,847
Avg. age of employees (years) 34 34 Municipalities with coverage 3,791 3,958 Avg. time employees working for company (years) 6 5 Customer satisfaction index 7.06 7.39 % women 46% 41% Municipalities with 3g 3,288 3,537 % women in management positions 29% 20% Municipalities with 4g 140 183 Persons with disabilities (total) 216 223 Persons benefiting from Telefônica Brasil Foundation 358 450 social projects (thousands) % Afro-Brazilians n/a 25.4%
Environmental 2014 2015 % employees w/collective bargaining agreement 92% 96%
Power consumption (kwh) 1,559,018,212 1,559,018,212 Employee satisfaction index 86% 82%
% purchased from renewable energy sources 26% 22% Number of hours of training 176,562.60 1,261,253
Investment in training (R$ million) 10.5 16.8 Emissions (tCO2eq) 228,614 249,527 Turnover rate² 24* 24.3 Internal waste (tons) n/a 7,145 Absenteeism rate 2,284.09 3,182.68 Customer-generated waste (tons) n/a 646 Accident rate 0.09 0.51 Water consumption (m3) 1,154,269.55 1,138,231.05 Telefônica Brasil Foundation investments (R$ million) 41.9 41 (3) includes proforma results for GVT through April and consolidated as from May, which was reported in the results for Telefônica Brasil SA for the fourth quarter of 2015 *Adjusted 2014 data. (4) Adjusted 2014 data.
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Commitments_
During 2015, Telefônica Brasil maintain undisputed leadership in the achieving a national leadership position In February 2016, OpenSignal Report cited engaged in activities to which it mobile sector and convergence in the 3P market Vivo's 4G network as the fastest in Brazil. had committed itself in the 2014 Continue to distinguish our mobile Offer a competitive 3P (triple-play bundle) Sustainability Report. offerings through data network quality portfolio nationwide, which will be leveraged GVT integration doubled the number and innovative digital services; engage through an improved pay TV offer (100% HD with fixed broadband connections, with greater in cross-sell activities (marketing the interactive services). participation of high-speed customers, company's mobile service to GVT and doubled the subscription TV customer customers and vice versa) to evolve Fortify our operating model, ensuring best base, which has already reached 1.8 million Strategic priority convergent offers (4-Play) that deliver practices, segmented models and technological connections. benefits to customers. solutions to streamline processes and improve Guidelines the customer experience. We are moving ahead in expanding our Expand the Vivo brand to strengthen fiber optic network. By year's end, we were Achievements attributes of GVT. Expand and optimize our high-speed at 16.7 million homes passed (residences broadband (ultra broadband) network, served by the service).The fiber network Strengthen our network of channels to using the most appropriate technology for outside the state of São Paulo (in operational provide the best customer experience, each market segment, within and outside areas of the former GVT) continued to both online and in our bricks-and-mortar of São Paulo. expand, reaching new locations, such as stores. Navegantes, Santa Catarina; Sete Lagoas, Maintain our absolute leadership position Minas Gerais; and Cachoeiro de Itapemirim, Integration between Vivo and GVT has in 3G coverage – over 3,500 municipalities Espírito Santo. positioned our firm as an integrated served in Brazil, which is 51.7% more than telecommunications operator and pay our closest competitor. We have begun several structural projects TV leader in the Brazilian market, which is to integrate and elevate our 3P portfolio built upon a robust network with national In 4G service, coverage reached more than to a national level, simplify processes and 19.7% presence and a comprehensive portfolio 90.3 million people in 183 cities. improve service models for fixed telephony to satisfy all market segments. customers in the state of São Paulo. of net revenue was directed to We implemented a series of cross- sell activities via various channels, Our strategy is focused on the valuation of investments offering mobile service benefits to GVT customers and vice versa .By the close our company and generating returns to our in improvements of 2015, more than 150 Vivo stores were offering GVT products. shareholders, investors and stakeholders.
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Consolidate our national position in the • a quality end-to-end program, and Investments in maintaining the quality of business segment. • an optimized field operations plan services and expansion of customer base Leverage the GVT network outside of São Paulo accounted for 73% of total investments in to grow in the corporate sphere. Tactically leverage GVT information 2015.Substantial investments were made in technology systems to improve the maintenance and expansion of voice and R$ 180,4 Harness high-speed, broadband customer experience within the mobile internet services, which represent a network expansion in São Paulo to gain concession area. significant portion of the company's revenues. MILLLION competitiveness in the SME market. We have adopted a new strategy focused on In 2015, through 2,565 new construction invested Maximize revenue through cross-selling mobile customers and business model sustainability. sites, we maintained a concerted effort to and digital services. A significant portion of the R$ 8.3 billion improve signal quality in several regions and to support total invested over the course of the year expanded rural coverage to achieve company We invested R$ 180.4 million to support was directed toward expanding and maintain goals. In addition, we are continuing to deploy the growing strong growth in demand for data (fixed systems and networks to satisfy, in an the future of mobile internet, reaching 183 and mobile data services, as well as optimal fashion and with the best possible municipalities with 4G service. demand for high-speed services dedicated to the service, customer demand for mobile and corporate market) and to supplement fixed data. Implementing a high performance data the 4G network in major cities including culture based on the metropolitan areas São Paulo, Rio de We launched a Quality Plan that involves Establishing a unique culture that is Janeiro, Florianopolis and Porto Alegre, the entire company, which is focused on customer-driven, financially disciplined and among others. improving the customer experience, allowing oriented towards performance, effectively us to consistently increase customer leveraging Grupo Telefônica's global scale Integrate the sales force for the satisfaction indicators. and know-how. 2,565 business segment and implement sites several cross-sell activities to Constantly seek excellence in costs and Promoting a set of activities that results in consolidate our national presence the optimization of CAPEX substantial improvement of the customer constructed to through Vivo integration with GVT. Leverage the complementarity of the satisfaction index. Telefônica Brasil and GVT networks to improve signal Customer focus as a key value optimize our infrastructure. Designing a new organizational structure proposition that allows for total integration of the quality and Sustain our premium positioning with the Capture value through efficiency and management team, only a few months implementation of: scale initiatives in purchasing, logistics, following the completion of the GVT coverage • a segmented customer service model, administration and other areas. acquisition.
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Recognition_
EXAME MAGAZINE MOST ADMIRED COMPANIES MARKETING BEST SUSTAINABILITY GUIDE IN BRAZIL (CARTA SUSTAINABILITY AWARD 3 rd consecutive year CAPITAL MAGAZINE) (MARKETING MAGAZINE AND 1 st place in the MADIAMUNDOMARKETING) Exame magazine Fixed Telephony 3 award-winning projects and Getúlio Vargas Operator and Mobile Foundation Studies Telephony Operator • Volunteer Day Center (GVCES) segments. • Rural Schools Online Program One of Brazil's most • Digital Billing sustainable companies
CORPORATE SUSTAINABILITY GREAT PLACE TO WORK GOLD CERTIFICATION, INDEX (ISE) (FORTUNE MAGAZINE RANKING) BRAZILIAN GHG Membro 2015 PROTOCOL PROGRAM 4 th consecutive year 5 th best company to rd work for in the world 3 consecutive year; BM&FBovespa 1st incorporating GVT 2 nd best company data One of 40 companies to work for in Latin recognized for America sustainable performance
TOP OF MIND (FOLHA DE BEST AND BIGGEST (EXAME VALOR 1000 ANNUAL (VALOR S. PAULO NEWSPAPER) MAGAZINE RANKING) ECONÔMICO NEWSPAPER) Most remembered Best in the Best IT & Telecom brand by consumers Telecommunications company in the broadband industry category
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Corporate 2_ Governance
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Governance model_ G4-34
Our value proposition to shareholders Our Value Proposition and investors is to maintain a responsible business, with profitability and sustainability. To accomplish this, we maintain a business Maintain a responsible business, with profitability strategy focused on business performance to enhance the value of our company. We and sustainability through an action strategy 3 believe in achieving this through activities and standing relationships guided by sustainability and values focused on business performance to enhance the such as transparency, accountability, efficiency, value of our company. committees innovation and trust. dvise the Board of Directors
GOVERNANCE STRUCTURE Profitability 1 The role of our corporate governance is to ensure that these values orient all aspects of the company's management. Its structure consists of: Business 3 perpetuity 2 members EXECUTIVE BOARD currently serve on the AUDIT BOARD Executive Board
BOARD OF DIRECTORS ACIONISTAS STANDING COMMITTEES
There are three advisory committees to the Board of Directors 6 Audit and Control Committee Service Quality and Customer Service members Enhancing Committee comprise the Audit Board, Nominating, Remuneration and 3 company value Corporate Governance Committee three of which are alternates
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BOARD OF DIRECTORS Board composition* Monitors the Company's performance and makes decisions on issues relevant to the business.
It meets quarterly or when convened by the Eduardo Navarro de Carvalho Antonio Carlos Valente da Silva Luiz Fernando Furlan chairman. Chairman Member Member
Angel Vilá Boix Francisco Javier de Paz Mancho Narcís Serra Serra Member Member Member
Amos Genish Ramiro Sánchez de Lerín Garcia-Ovies Roberto Oliveira de Lima Member Member Member
Antonio Gonçalves de Oliveira Luis Francisco Javier Bastida Ibargüen Sonia Julia Sulzbeck VillaLobos Member Member Member
* New membership approved at the Annual General Meeting held on 4/28/2016. ** New position approved at meeting of Board held on 6/10/2016. CURRENT COMPOSITION
12 1 11 5 to 17 3 Members elected by a of directors elected statutory year term, with separate, preferred by general vote minimum and the possibility of shareholders vote of the common maximum number re-election shareholders of directors
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Contribution to progress_
EXECUTIVE BOARD AUDIT BOARD The significant increase in mobile data From a marketing standpoint, Telefônica Brasil Composed of no less than 3 to as many as 15 A permanent body, it consists of three consumption has resulted in changes in has begun to focus its offerings on data. The members. It is responsible for the conduct of the members and three alternates. marketing dynamics, which were underway in effects of this strategy can be seen in our business, adhering to guidelines established by 2015. Customer Satisfaction Index (CSI), which has the board of directors. Currently the company's increased since integration (learn more on p. Executive Board is composed of three members. Telefônica Brasil focused its investments on 41), and especially as we are the operator in expanding its 4G network and the capacity Brazil that has experienced largest growth in Executive Board Composition of of its 3G network to maintain the company's revenue in the sector. Composition the Audit Board quality advantage in the market. With its GVT acquisition complete, the company was able Taken as a whole, our efforts to contribute to expand its fixed network nationwide, with to progress represent a value proposition for Amos Genish Flavio Stamm fiber technology, through the integration of the society, which includes universalization of CEO Sitting member Vivo and GVT networks. A structured process services, as well as social and cultural activities of capturing synergies is underway with initial (learn more about our Commitment to society David Melcon Cremênio Medola Neto gains being higher than anticipated. on p. 30). Director of Finance Sitting member and Investor Relations1 Charles Edwards Allen Breno Rodrigo Pacheco de Oliveira Sitting member General Secretary and Legal Director Gilberto Lerio (1) On 4/8/2016, David Melcon took over as Director Alternate of Finance and Investor Relations, a position which had been held, on an interim basis, by Amos Genish. Stael Prata Silva Filho Alternate
Juarez Rosa da Silva2 Alternate
LEARN MORE (2) Elected at the Annual General Meeting New technologies are helping to reduce digital Access our Reference Form at held on 4/28/2016. bottlenecks and boost economic, environmental www.Telefônica.com.br/ri. and social development
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ECONOMIC IMPACTS IMPACTS ON GDP BY IMPACT TYPE IMPACTS ON EMPLOYMENT IMPACTS ON EMPLOYMENT BY IMPACT TYPE We are one of the most important economic Millions of euros Telefônica is also a major driver of job drivers of progress within the communities in creation. In 2015, we contributed to Brazil 0.13% of the 0.04% of the which we operate. As a contributor to GDP growth, 0.16% of GDP* 0.36% of GDP* with more than 441,710 jobs – direct, we help to propel the economy forward, both indirect and induced. number employed* number employed* directly and indirectly, as we have the ability to generate a wealth multiplier effect through our activities. In 2015, our presence represented 1.07% of Brazil's GDP. Total Total 14,615 M 441,710 1.07% 0.48 % 0.31% of the is our share of 0.55% of GDP* of jobs created in Brazil in 2015 were generated number employed* Brazil's GDP Induced impact by Telefônica Impact induced 2,241 120,359 Direct impact Direct impact 4,926 35,512 Indirect impact Indirect impact 7,448 11.44 285,839 additional jobs are created every time Telefônica hires a Telefônica employee * Percentage in relation to the total of those employed. Source: Análisis PwC
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SOCIAL IMPACTS
Percentage of fixed-term PERCENTAGE OF WOMEN SALARY DIFFERENCE BETWEEN MEN EMPLOYEE TRAINING The percentage of fixed-term contracts at In 2015, the percentage of women at Telefônica AND WOMEN Telefônica Brasil exceeds the national average stood at 40.9%, more than 10 percentage points The wage gap between men and women by 3.4 percentage points. above the average for telecommunications that exists in Brazil exceeds, by 10 times, the In 2015, employee training at Telefônica sector companies and close to the average for difference in Telefônica Brasil. women employed in Brazil (43%). Brasil reached 35.6 hours per employee, exceeding by 10% the average for Latin American companies (32,3 h/ employee).** % Sources: : Telefônica and the Brazilian Institute % Sources: Telefônica, Bloomberg and the % Fontes: Telefônica and the ILO (2013) of Geography and Statistics (IBGE) International Labour Organization-ILO (2015) 100 50 25
80 99.9 40 20 22 96.5 43 40.9 60 30 15 LOCAL SUPPLIERS 30.4 40 20 10 In 2015, Telefônica contributed to local development through purchases with 20 10 5 local suppliers.
0 0 0 2 2015 Telefônica Brasil Brazil Telefônica Brasil Industry average* Telefônica Brasil Brazil
National average
(*) Average from a selection of 6 industry companies analyzed by Bloomberg (KT Corp, Telecom Italia, BT Group, Orange, Vodafone, AT&T).2014 data.
(**) A PwC Saratoga study is a benchmarking tool that contains HR indicators from over 2,000 companies worldwide.
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NETWORK IMPACTS GRI G4-EC7 ENVIRONMENTAL IMPACTS Broadband deployment contributes to the Industry studies indicate that our services have development of society by improving the the potential, by 2030, to reduce, by 9.7 times, productive and competitive capacities of our environmental footprint. Currently, our local business, which are aided by significant carbon footprint is 249,527.69 tCO e. 2 0.13 % improvements in the speed of data traffic and the automatization of processes, as well as percentage share expanding the possibilities for people to access information and culture, and diversifying their of our carbon entertainment options. footprint carbon In 2015, the broadband set (fixed and mobile) had an 11.2% positive impact on GDP. in Brazil
TELEFÔNICA'S BROADBAND OUR CARBON FOOTPRINT IMPACT ON GDP
% Source: PwC Analysis % Source: PwC Analysis 2.09 % percentage share of Total Total 11.2% 245, 923 .14 tCO2 e our carbon footprint on the population
Fixed broadband Mobile broadband Scope 1 Scope 2 Scope 3 of Brazil 5.6 5.6 27,694.45 211,809.12 6,419.57
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Responsible 3_ business
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Trends_ Digital future The process of digitalization of the economy offers new We live in a world that's in constant SIX MEGATRENDS challenges and opportunities OF THE DIGITAL WORLD motion and ever evolving; in which INTERNET AND MEDIA borders are increasingly becoming easier Content is offered via applications Entrepreneurship to overcome. Phenomena such as climate running on networks. There is on the rise change and mass immigration, let alone increasing traffic demand for the 1 presents opportunities for concerns over the economy, education businesses to support this consumption of video, which is, in ecosystem and health are today more global than Transformation turn, making it a key element of ever. What yesterday was in the future is in health 6 2 commercial packages. today's reality. Technology allied to the health sector can affect a cultural transformation Technological transformation is FIXED + MOBILE taking place in all areas of our lives. Global market Consumers want comprehensive Connectivity and digitalization Establishing new solutions that embrace connectivity standards for trade have transformed society and the and investment needs anywhere – at home, in the office economy, transforming those two A planet with or on the road. This translates into a need essential elements and differentiation the resources 5 3 for more infrastructure investments and in a world that is increasingly global, to increase demand for the proliferation of 4-Play packages. resources encourages open and digital. Today, people need innovation and want be connected all the time 4 to communicate, share opinions Urban world NETWORK AND I.T. and information or simply consume The expansion of Less interactivity Cloud technology allows those urban centers requires content. sustainable planning more interactive functions previously performed by physical servers to become Precisely in this regard we have virtual, producing efficiencies and identified six closely related CONNECTIVITY AND CONVERGENCE market share in the global GDP and that operational flexibility. It allows megatrends that will define different The digital future, rising entrepreneurship makes technology's role in people's lives for an evolution of new, more industrial sectors by 2030 and and the global marketplace are having ever more significant, as it allows them to software intensive architectures, technology's role in these is undeniable. a profound impact on businesses. On access products and services that represent which will represent a competitive The increasing use of mobile devices, the other hand, some trends are also economic and social developments. advantage for initiatives based along with the proliferation data and important for business sustainability, such Connectivity, therefore, is becoming more more in applications than digital processing are some of the keys as urbanization of the planet, raw materials important, such that we can identify three equipment. to changing market behavior in most shortages and the reinvention of healthcare. specific trends in the telecommunications industries. The technology sector continues to gain sector:
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Our strategy_
To achieve the goal of becoming an "OnLife Telco" and placing the customer at the center of everything we do, we will focus on offering a value proposition with excellent connectivity, integrated % products and services, and a unique user 29 Connectivity experience. at the core of Global of connection the customer Synergies to websites At Telefônica, we believe the data experience Plan occur via smartphones economy is one of the great opportunities 4 for the future and, therefore, we view this and tablets as an opportunity for growth.
Telefônica's strategy aims stimulate an Life economy of platforms and take advantage of data and market opportunities. We Connected want to become the best ally of the digital US$204 lives of our customers and, therefore, we billion will orient our business model toward this purpose. have been (4) Source: 2015 Megatrends Report Differentiated Our challenge is focused on giving big data Sustainable spent by means customers sovereignty over their digital services Businesses lives, enabling them to take action on of mobile our network. By taking all the data that we generate and bringing it together, our devices goal is to give citizens the opportunity 4 to empower their network activities and in 2014 decide how best to use such data.
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Our business model_
Connectivity is in our DNA because we believe Connectivity and the delivery of content We chose to reinvent that it’s the oxygen of digital life. Accordingly, and services are insufficient if they’re not we work to improve our customers’ range, accompanied by a differential experience that helping them to reduce geographic difference reinforces the values we seek to showcase, CUSTOMER FOCUS SUSTAINABLE BUSINESS MODEL geographic, connecting more people at greater which demonstrates our capabilities and speed and better traffic management. In this strength as a reliable, challenging and open way, customers get the service and required company. At Telefônica, we believe the Excellent connectivity Big Data and innovation quality they want. Meanwhile, we are constantly foundation of a responsible enterprise is one Leveraging our national presence Responsibly leverage vigilant about infrastructure management and that goes beyond short-term profitability. Our and portfolio to provide our available data to make and making necessary investments to sustain tools to achieve this objective are, primarily, customers access to their digital decisions, which optimize our lives – anywhere, anytime, with the business through scientific and grow our network. “big data” and “end-to-end digitization,” appropriate speed to meet their methodologies and facts. together with an optimization of our capital and needs. In addition to getting our customers connected, corporate simplification. we strive to speak with one voice to our customers. Thus, our objective is to present At Telefónica, we want our business to have a Bundled packages End-to-end digitalization people with a simple, integrated and unified positive impact on society, contributing to the Innovate with bundled, integrated Accelerate the transformation offer that is attractive and easy to understand. creation of wealth and well-being. Therefore, offerings, of 3P to 4P and 5P, for of our business through Customers want us to facilitate their digital lives our business model not only ensures corporate all segments. digitization, streamlined processes and efficiency with and we seek to fulfill that desire with the growth in the medium and long term, but also generation. best products, services and content bundled in a solidifies a vision for the future that highlights single commercial package. our work as a responsible business.
Customer values Capital allocation and experience and simplification Putting the customer at the center Simplify, optimize and direct of our value proposition ensures our resources towards more our effectiveness in customer effective achievement of our care and allows us to build digital commitments to customers and convenient services that offer and shareholders. We want our business to generate positive them a unique experience. societal impacts that contribute to wealth creation and well-being.
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Materiality and stakeholder engagement_
G4-18, G4-19, G4-20, G4-21, G4-24, G4-25, MATERIALITY MATRIX (CONSOLIDATED) G4-26, G4-27 High significance Corruption Transparency and reporting Service quality and Growth of the industry and the economy customer care In 2015, for the first time, we conducted a materiality identification initiative Telefônica Brasil in Brazil. The process was aimed at learning, from the perspective of our key Significant Local supply Training and empowerment Social investing Marketing and stakeholders, which social and environmental Service use Reverse logistics Employee engagement communications by at-risk groups Privacy and information security Energy efficiency Directors and managers issues are most significant to them and, E-waste Digital inclusion thereafter, using this knowledge as the basis for Innovation and technological development and accessibility a Sustainability strategy review and a means of defining the scope of our 2015 Sustainability Report. The results of this endeavor can be seen in the image on the right. Average Mining in conflict zones Outsourcing and offshoring Health and safety Social applications for IT significance Other solid wastes Conditions and benefits Atmospheric emissions Planned obsolescence Protection and guarantee of human rights Use of natural resources To accomplish this task, dialogue and Biodiversity** Smart cities Labor relations in the supply chain consultation sessions were carried out, which Climate change Diversity Environmental impacts in the supply chain generated significant insights, expanding User health and safety Electromagnetic fields Internet of Things (IoT) Freedom of expression Disaster preparedness and response Telefônica Brasil’s perception of the issues and Green IT and efficient products challenges that are most critical to the industry. Volunteerism Ten. direct interviews were conducted with Cultural support company shareholders and executives, while another 1,511 interviews took place via an online questionnaire submitted to employees, suppliers, service providers and commercial Insignificant/ partners, in addition to the convening of Not mentioned focus groups with 14 employees, six board representatives and 9 members of civil society. Other investigations included a review of Insignificant/ Average significance Significant High Significance existing industry tandards and guidelines, as Not mentioned well as secondary and follow-up research. Stakeholders
Telefônica Brasil Executives
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Risk management_
SUSTAINABILITY PANEL Composed of experts, the panel will be Through our risk management, we have To maintain our consultation with stakeholders consulted regularly on social, innovation established policies and procedures to in 2016 we will put together a Sustainability and environment issues. Beyond this, we identify, monitor and mitigate threats to Panel, whose aim will be to make tangible the will make it possible for our stakeholders which we are exposed, thus maintaining expectations of these interested parties and to interact with each other in a structured a preventive stance against potential engage with fundamental elements of our manner, facilitating the tracking of strategic, economic, operational, social materiality matrix materiality and stakeholders’ common challenges. or environmental impacts on our current recommendations. operations.
Principal risks have been divided into 2016 PROCESS four categories - business, financial, operational and global. All are divided into RESULTS subcategories that include additional risks as regard reputation, regulatory and legal Materiality compliance, human resources, fraud, and 20 Dialogue platform communications, among others. key participants analysis Identification of critical (quarterly meetings) Identification of Structured process and insertion Our risk management philosophy and into our materiality analysis practices are disseminated to our strategic participants significant aspects Up to Linkages to partners through training, which ensures Quarterly reports compliance with our operational business from departments and principles and other aspects that can stakeholder activities Global, semiannual analysis of opinions impact our brand and institutional image. 100 Review in relation to groups additional critical Additionally, coordinate the application other countries Annual report: Recommendations and of resources to anticipate trends and participants (semiannual trends legislative changes. consultations) G4-14, G4-57
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Sustainability_ G4-15
To make Telefônica Vivo into a benchmark Sustainability A responsible Customer telecom company for sustainability, We want to Talent and management Sustainable Cultural business satisfaction and Environment reduce impacts and risks related to our activities, diversity Supply innovation sponsorships that earns digital trust taking advantage of opportunities to ensure the confidence chain efficiency and sustainable growth. of customers
Applying sustainability in our strategy permits us to identify opportunities offered by new technologies to generate societal value and RISK MANAGEMENT RESPONSIBLE PRODUCTIVITY LEVERAGING GROWTH execute effective management of impacts THROUGH SUSTAINABILITY associated with our activities, thus making our business ever more responsible. We seek We work to anticipate trends and We work to improve our productivity, transparency in our business and the construction legislative changes, which might directly transversely incorporating sustainability Enhance the social and environmental of balanced and long-lasting relationships. impact our business. criteria in our processes. In this context, benefits of products and services we work to satisfy the expectations we offer to our customers, both To ensure effective implementation of strategy in of our customers and ensure quality. corporate and individual. Our efforts our activities, we take the views of our employees Additionally, to generate more value are also focused on making the digital and other stakeholders into consideration, as for our products, services and the environment ever more open and secure, we strive, together, towards the generation of business itself, we focus on talent allowing the geographic, social and shared value, as well as the development of management, energy efficiency and personal accessibility opportunities that individuals and society. In this way, we link the The company’s strategy orients our Globally environmental management in our technology brings to be available to all. goals of sustainability to the development and Responsible Business Plan, which sets processes and facilities, as well as We also seek to support cultural projects management of our business, incorporating forth the achievement of concrete goals. It the responsible management of our that address social needs. the processes and objectives, which are then embraces the following priorities: supply chain. We strive to maintain an interwoven into the DNA of Telefônica. ethical, transparent and fully consistent Customer satisfaction approach to all our activities. Sustainability is embedded in Telefônica’s Digital trust business strategy in Brazil, as it is worldwide. Supply chain Diversity and talent management To achieve this, we rely on a common model of Environmental management action, which structured along three levels of Sustainable innovation commitment and covers our entire value chain. Cultural sponsorships
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G4-16 GHG Protocol SUSTAINABILITY GOVERNANCE As we make continuous improvements and To ensure that our understanding of A calculation tool that establishes a worldwide Ensures the practice of responsible increasingly incorporate sustainability in strategic sustainability is aligned to societal demands standard to measure, manage and report management in our activities, which is processes, we are using the model suggested the company voluntarily became a signatory greenhouse gas (GHG) emissions. It was always in line with values such as balance, by Corporate Sustainability Index (ISE) with to principal global commitments focused developed by the World Resources Institute transparency, accountability, efficiency indicators being monitored by the company. on economic, social and environmental (WRI) and the World Business Council for and innovation. Our role is to contribute development. Among these are: Sustainable Development (WBCSD) to assist to sustainability by making it increasingly managers in the preparation of emissions present in our business model. ISE Global Compact inventories. An initiative of the United Nations (UN) to With the 2015 merger of Telefônica Vivo In 2015, Telefônica was included for the 4th encourage companies to adopt corporate and GVT, an executive board for Responsible consecutive year in BM&FBovespa’s Corporate social responsibility and sustainability Women’s Empowerment and Sustainable Management was created, Sustainability Index, which gathers together policies by adopting ten principles related to Principles whose role is to evolve in synergy with the shares of 40 companies recognized for human rights, labor, the environment and Created by UN Women and the UN Global all areas of the company and to orient their sustainability performance into a single corruption. Compact, this initiative sets forth seven the social, environmental and economic portfolio. This pioneering initiative for Latin principles to help the business community development of our services, products and America was launched in 2005 to establish to incorporate values and practices aimed projects, ensuring the implementation of a a investment environment compatible with Carbon Disclosure Project (CDP) at gender equity. Telefônica Vivo signed the responsible business plan. To achieve this, demands for sustainable development and Worldwide support mechanism for organizations commitment in March 2016. we are working to offer guidance to all of our to encourage ethical responsibility within to measure carbon emissions and implement divisions on sustainable concepts related to corporations. Internally, we manage the effective reductions, stimulating an economy their activities. continuous improvement of our performance more focused on more rational use of energy in the portfolio through the involvement of a ICO2 and the adoption of renewable matrices. A joint initiative of BM&FBovespa and In the merger process, we created a unified variety of divisions and executives. For each the Brazilian National Development positioning platform, Vivo transforms. The of the seven ISE dimensions, we have a vice Open Letter to Brazil on Climate Change Bank, this indicator is composed of the platform aims to offer communications, in the president as sponsor. An Ethos Institute initiative for companies shares of IBrX-5015 index participants that most objective and strategic way possible, whereby they undertake to control and reduce have agreed participate in the initiative, about projects and initiatives being carried out greenhouse gas (GHG) emissions and collectively adopting transparency practices with as part of our sustainability strategy, as well (5) An index that measures the total return of a theoretical press demands to public authorities for the good respect to their greenhouse gas (GHG) as the evolution of our governance to become portfolio comprised of 50 stocks selected from among those most traded on the BM&FBovespa in terms of of the nation. emissions. an ever more responsible business. liquidity, which are weighted in the portfolio by the market value of those shares that are available for trading.
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Ethics and compliance_ G4-56, G4-57, G4-58
We guarantee the solidity and prestige of Telefônica Our Principles CORPORATE BEHAVIOR PRINCIPLES Among the topics covered by our Corporate Brasil based on our Corporate Responsibility and COMMITTEE Behavior Principles are respect for human rights, Behavior Principles, which define and inspire how DEFINING OUR ETHICAL CONDUCT The body that monitors the implementation of combatting corruption and a ban on donations we develop our activities. Equivalent to a corporate IN EVERYTHING WE DO Our Corporate Behavior Principles is comprised of to political parties or persons and entities related code of ethics, they represent the set of internal top management executives with representatives to them. regulations that define how we should act. from the divisions of Corporate Communication, Institutional Relations, Human Resources, The company has the Principles of Behavior Auditing, Investor Relations, Legal and the Office of channel on its intranet where visitors can find H the President. ty o ri ne LEARN MORE ABOUT answers to questions about issues related to this g s e t topic. The channel, together with other means t y Established in 2009, the committee meets OUR CORPORATE In of communication (toll-free 0800 phone line, periodically to ensure that guidelines are in BEHAVIOR PRINCIPLES e-mail, and others) are available to employees for keeping with legal requirements and best www.Telefônica.com.br > About GENERAL reporting on situations that violate the Principles of R PRINCIPLES corporate practices. In addition, support is provided Telefônica > Corporate Behavior Principles e Behavior, such as conflicts of interest, inappropriate s by the executive board on Sustainable and p r access to confidential information, among others. e s Responsible Management, which carries out the c o t f This provides all employees with the means by t t h function of secretary. fo c ig which to make inquiries about these topics, as well r e R th esp n as file complaints. e law R a Hum
Telefônica Brasil analyzes and takes appropriate Disseminates the Corporate Analyzes and answers questions, measures when situations are reported. Behavior Principles complaints or allegations presented throughout the Group. by our stakeholders. Over the course of the year, there were 867 recorded complaints and inquiries, which, when CORPORATE added to another 14 that were still pending BEHAVIOR PRINCIPLES from 2014, totaled 881 internal reports that COMMITTEE were forwarded along for analysis. Of this total, investigations were completed on 689, of which Reviews processes and Ensures the adjustment of our 111 were found to have merit.* G4-SO5 controls to ensure compliance Corporate Behavior Principles (*) These numbers include all communications received with legal requirements and to legal requirements and best through Telefônica Brasil’s official channels, without benchmark practices. business practices. excluding any contacts.
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Innovation_
To become a telecommunications company activities, which are now entirely focused SMARTCITIES able to offer services that digital age on Internet of Things (IoT) projects. One of consumers want, Telefônica Brasil works to the outstanding initiatives during the year consolidate its heritage as a telecom operator was an energy efficiency project. It involved In April 2014, Telefônica Brasil initiated a with long-standing experience in fixed and the installation of censors and actuators project to transform Águas de São Pedro – a mobile telephony, becoming an ever more in major pieces of electricity-consuming tourist community of 2,700 inhabitants, 187 % competent company that offers advanced and equipment, which were connected to a km from the city of São Paulo – into Brazil’s 50 differentiated, customer-oriented services who dedicated platform. This solution allowed first, 100% digital city. The modernization of the world’s entrepreneurs live in this new digital ecosystem. for the use optimizations that generated of the municipality’s telecom infrastructure are between significant savings in energy consumption. involved replacing old telephone exchanges 25-44 years old We have an Innovation Center that The installation of the pilot project and its copper cables with fiber optics. This develops technology focused on the early began in the fourth quarter in the Meliá paved the way for a technological revolution stages of new solutions. Based in São Paulo, Hotels International chain of hospitality and the making of a smart city. it is the first Telefônica SA research and establishments. development center created outside of Together with private partners and public Spain. It develops future digital solutions, as To build a solid relationship with academia authorities, the company brought new % well as fosters knowledge about technology, similar to the way by which other large services and connection possibilities to 19 enhancing innovation in an open and companies are pursuing knowledge the population. Health, education, the growth is expected in collaborative fashion. production and innovation, we moved environment, mobility, safety and municipal the global micro-finance forward with a technological cooperation management all benefited from this project. market over the next In 2015, the Telefônica Brasil Innovation agreement with Centro Universitário da An example is a solution for sanitation five years Center was included as part of Office of FEI (University Center of FEI), which was management, which enables agents be the Vice President for B2B. The change signed in January 2014. Over the past year, connected by tablets with applications in reporting structure was followed by an we have developed research related to that allow them to identify the location evolution in the manner of the center’s information architecture and wearables. of dengue outbreaks, as well as other health risk situations. It also offers citizen applications, which allow them, through their handsets, to monitor potentially US$ 14 hazardous conditions. In December, with the completion of the pilot initiative, project billion The Telefônica SA Innovation Center in São Paulo control was transferred to the city, leaving a legacy of technology and knowledge. in micro-finance transactions
is the company’s first established outside of Spain will take place by 2019 Report 2015 Megatrends Source:
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OPEN INNOVATION In 2015, the company’s innovation and INTERNET OF THINGS entrepreneurship expanded with the arrival in Brazil of Telefônica’s Open Future, the company’s global network, which is present in 17 countries In Brazil, Telefônica Brasil is testing and whose goal is to capture and develop talent, Sigfox, a pioneering network in the as well as digital entrepreneurship existing in nation, which already exists in Europe, successful businesses. The Open Future program for specific use in Internet of Things brings together all ongoing activities, initiatives (IoT) devices, where IoT refers to a and projects in the field of open innovation, such monitoring network that connects as the startups accelerator, Wayra, which, in 2015, objects as a means of monitoring celebrated three years in Brazil. There is also the them. Amerigo Fund that invests in digital businesses through venture capital. The advantage of the system is to reduce energy consumption in IoT- Wayra has consolidated itself as the main startup equipped devices as compared to accelerator in the country. Over the course of others. This can be significant for the past three years, this Brazilian academy objects in which this factor is critical, has invested R$ 5.8 million in digital businesses, such as water and gas meters gas, high- while its startups raised more than R$ 36 million value load tracking meters, rubbish from the market. Across the portfolio of Wayra- dump and sewer monitors, and parking accelerated companies, eight have already signed sensors on public roads. partnership agreements with Telefônica Brasil, demonstrating the effectiveness of the company The cities of São Paulo and Rio de and Brazil itself as innovation ecosystem. Janeiro must have full coverage by the close of 2016 and, soon, Sigfox use will Another success factor was the level of growth expand with anticipated demand. experienced by 15 startups supported by Wayra The Open Future program, a global network Brasil in 2015. of the company that is present in 17 countries, expanded Telefônica Brasil’s performance in open innovation and entrepreneurship
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Commitment to 4_ society
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As a concessionaire and the largest company in Brazil’s telecommunications sector, Universalization Telefônica Brasil promotes social development 1 of services from increased investments in network coverage – achieving connectivity goals for more and more people, even in remote localities – to the supply of services, products and initiatives that contribute to the quality of life and promote education and culture for the citizenry . Improving quality of life for 2 children and young persons
Contribution to social 2 3 action and culture BILLION is the estimated Our Value Proposition number of residents living in low- Reduce inequalities through the universalization our income areas by 2030, double services, providing access to all, and seize opportunities the current total6 for the use of new technologies in the advancement of knowledge attainment, culture, and solidarity, successfully (6) Source: 2015 Megatrends Report applied and aiding in the work of societal transformation .
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Universalization of services_
Universal service means enabling access to The resource application priority is in the Education all people, regardless of their income levels or expansion of 4G service – a technology that geographic location. delivers greater data transmission speeds – and 3G capacity expansion, providing greater Bringing connectivity to all is still a challenge Accessibility capillarity across Brazil. for the telecommunications industry. According Inclusion to the World Economic Forum’s Global ANTENNAS Information Technology Report 2015, currently through Popularly known as antennas, Radio Base 60% of the world’s population does not have Health care Stations (RBS) are a radio wave system by internet access. In developing nations, this connectivity which cellular phones can communicate with figure rises to 90%. the system and each other. Each unit connects Financial to the nearest RBS within its range. The signal is services relayed, antenna-to-antenna until it reaches a destination device or a Switching Control Center DIGITAL INCLUSION, INFRASTRUCTURE (learn more on p.12). AND NETWORK EXPANSION G4-EC7 Digital inclusion necessarily implies Each RBS coverage area is known as a “cell,” network coverage expansion, something that which is how we get the term “cellular.” occurs, principally, through the increase of radio base stations, or antennas, allowing signals to reach remote or socially vulnerable localities. Cobertura Microwave In 2015, investments of R$ 8.3 billion Antenna were made, of which US$ 7.1 billion were Cellular antenna network-dedicated, not only to expand 3,975 3,524 183 coverage, but also to improve service and customer care quality. In its mobile business, municipalities municipalities municipalities the company continued enhancing its Tower Equipment leadership in 3G coverage, which reached served by 3G 4G container 3,500 municipalities, while our 4G service increased to serve over 90.3 million people in Vivo 183 cities.
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Criteria for installation site selection_
LOCAL INSTALLATION g4-ec7 Advantages of sustainable sites When out of antenna range, a cell 1 Cost phone has no signal. This is why one of the main focuses of attention in network deployment is the selection Public street Reduces visual impacts and maintenance of RBS locations. In lighting 1 making such selections, a set of criteria Security is evaluated so as to identify the best Uses no harmful gas 2 Antenna locations for equipment installation. 2 Prevents equipment Licensing The importance of evaluation is theft and corrosion scenario highlighted by the fact that, after 3 3 installation, it is critical that each site remains in operation because, once Consumes less energy incorporated into the network, these 4 Strategic sites are of great importance to overall Underground boxes Improves connection position system connectivity. This can be quality 4 experienced when an antenna fails to 5 function, causing a momentary coverage outage. Energy Sustainable sites is positioned also satisfy local autonomy SUSTAINABLE SITES laws and enable the installation of antennas 5 With 100% national technology, with needed to improve and expand services, as well as innovatons developed by Telefônica accelerate 4G network deployment. Brasil, sustainable sites transmit R$ 7.1 Legal wireless signal transmit wireless URBAN (STREET) FURNITURE context signals from public street light poles. Other elements have already been integrated into billion 6 The initiative mitigates visual impacts urban (street) furniture, such as public telephones, invested to enlarge in urban areas and offers additional newstands, and Vivo's own customer service coverage and improve benefits. Its use is aimed at increasing stores. They are also utilized as transmission Contractual the amount of equipment available in bases, thereby increasing the signal density, quality of service and situation urban areas, thus improving the range improving connection quality and, generally, the customer care 7 and service quality. overall quality of the customer experience .
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Electronic equipment Energy efficiency Turn-in/m Circular economy_ ainte Water consumption nan ce/ Paper Use ref ur bi sh Refrigerant gases e The circular economy simulates the sustainable OUR d Batteries e Reuse q behavior of ecosystems, where there is waste CIRCULAR u ip and balance, based on the relationships between ECONOMY m e
n the different actors. Effiiciency t
Maintenanc At Telefônica Brasil, we have integrated this e Reuse philosophy into our activities through reuse and Customer recycling. In our value chain it is evident through Terminal rentals low-carbon purchasing, infrastructure sharing, M2M services/IoT/big data and initiatives such as Vivo Renova, which Scope 3 CO2 emissions encourages the replacement of smartphones Cloud computing and tablets for new models through turn-in Telefônica Smart Waste programs, among others. Brasil R e c y c se li We have implemented different strategies a n h g c g to optimize the resource use throughout our r n u li p c y value chain and promote the turn-in of used c e merchandise as part of the production cycle. R These initiatives are focused on major networks and customers, which have the highest demand on materials and resources.
In addition, we focused on development of digital services where there is circular economy possibilities, such as Smart Waste, global Suppliers tock initiative for waste management. Feeds
Ecoprojetos TELEFÔNICA BRASIL’S CIRCULAR ECONOMY PRINCIPLES Low carbon TCO2 purchasing
Scope 3 CO2 emissions Materials and renewable/ Share and Efficiency and ecoprojects Closed circle, Virtualization and Innovation ecofriendly resources reuse less waste recycling dematerialization
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Improving the quality of life for children and young people_
TELEFÔNICA FOUNDATION: INVESTMENTS Technology and knowledge are instruments EDUCA XXI DIGITAL CITIZENSHIP R$ Million for the transformation of society. Moreover, they are bridges for personal and social 50 development. The Telefônica Brasil Focused on developing multidisciplinary skills With the objective of developing citizen Foundation uses digital strategies as a means for the training of young protagonists in the awareness and stimulating solidarity, this 40 of sharing information, creating opportunities digital age. Investments are directed towards project relies on technology to connect
41 41 for connectivity and stimulating dialogue for training in digital digital, teacher development individuals to initiatives that encourage 41.9 30 action, as well as to mobilize and inspire. and content creation capacities . transformative activities .
20 TELEFÔNICA BRASIL FOUNDATION Learn more at: fundacaotelefonica.org.br/ Learn more at: fundacaotelefonica.org.br/ Created 16 years ago to improve the educa-xxi cidadania-digital quality of life for children and young 10 people through the use of technology, Telefônica Brasil Foundation sponsors 0 hallmark national initiatives that contribute RURAL SCHOOLS CONNECTED Jovempreender (YOUNG 2013 2014 2015 to knowledge access democratization. ENTREPRENEUR) The foundation operates through a global PERSONS BENEFITED DIRECTLY network that is present in 17 countries. Brazil has 5,570 municipalities and, in rural
Thousands areas there are approximately 65,000 public Encouraging social entrepreneurship as a Currently, the Telefônica Brasil Foundation schools 7. To ensure access to these localities lifestyle for young people. We integrate 500 is studying trends in innovation and have access to knowledge and technology younger generations into knowledge and technology to impact its current activities that respects cultural particularities, the Rural collaboration networks, and connect them 400 and assist it in its search for a better future. Schools Connected program aims to encourage to accelerators and universities, providing 450 In 2015, it invested R$ 41 million in social educational processes in schools situated in them with the conditions for innovation to 400 300 projects, directly benefiting approximately non-urban areas. In addition to technological flourish and transformations to occur. 358 450,000 people. infrastructure, the program provides teacher
200 training, deployment methodologies, digital Learn more at: fundacaotelefonica.org.br/ The activities of the foundation establish experimentation laboratories, and content. Since jovempreender the connectivity between technology 2012, over 5,000 teachers were given classroom 100 and entrepreneurship, citizenship and training, where the knowledge they acquired education. Our work is based on three areas benefitted approximately 115,000 students. 0 – education, digital citizenship and social Learn more at: www.escolasconectadas.org.br (7) Sources: Brazilian Institute of Geography and Statistics 2013 2014 2015 entrepreneurship. (IBGE) and the National Textbook Field Program.
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Contribution to social and cultural activities_
CULTURAL SPONSORSHIPS • Meninos de Araçuaí (The Boys of Araçuaí): and the band, Moinho) had the objective of We support social and cultural initiatives that Promotes social and cultural inclusion for showcasing samba rock samba rock, which is ensures the promotion of Brazilian culture and at-risk youth through extracurricular musical already significantly present in the local culture. constructs a cultural legacy for the country. initiation activities at school. 3 We operate in a transparent manner through A chorus of children and young persons (7-16 • The EX4Socio Cultural Circuit: Promotes million the appropriate use of cultural incentive laws, years of age) recorded six CDs and two DVDs, and values of citizenship, as well as safer and aligning projects we support with our mission performed on Pieta, an album by Brazilian singer- more humane school spaces by using rock to people and business values. Our activities seek to songwriter, Milton Nascimento; at numerous concerts address anti-drug and anti-bullying themes. transform society, connect cultures and people, presented in several cities in Brazil and abroad, such Musical performances and workshops were impacted by cultural care for the planet and help people live better as Paris (during the “Year of Brazil in France. held in public schools in the state of São Paulo. projects sponsored through lives through cultural options that encourage tax incentives leisure, creativity and social inclusion. We seek • MiniDocs – From the Stage to the World: • T eaching Concerts with Orchestra: POffers to minimize any impacts our activities may have Recognizes and supports new talent in Musica free concert performances by the Chamber leaving nothing but a positive legacy for the Popular Brasileira (MPB). Orchestra of ULBRA (Lutheran University of Brazil). regions in which we operate, strengthening our Concerts at the Vivo theater and TomJazz venue, Held exclusively for public school students and relationship and communication with the society. with 13 exponents of next generation MPB artists teachers in six cities in the state of Rio Grande 5,000 Throughout 2015, Telefônica Brasil supported – and tickets available at a “solidarity” price (the do Sul. Conductor James Flowers taught the through its Vivo and GVT brands – more than 50 donation of a book), which offered audiences school children about various instruments and children cultural projects across the nation, providing and an opportunity for knowledge dissemination orchestral movements. expanding access for communities to cultural and exposure to the performing arts, as well as and young assets and Brazilian cultural heritage, especially the talents of these aspiring musicians. Videos • Bituca Project: Free, professional-level music music. In total, these supported activities and of these activities have been turned into a instruction based on an exclusive and unique persons benefitted from projects impacted more than 3 million people and 13-episode documentary series shown on method that features a repertoire focused on cultural projects, particularly contributed to the music education of over 5,000 broadcast television and digital video platforms. Brazilian music. those associated with children and young persons . Individual instruction on 11 instruments, musical training • Rio é Samba Rock, meu irmão! (Rio is singing, sound engineering and production, Samba Rock, my brother!) contributes to piano tuning and restoration. MUSIC the democratization of access to music and • Vivo EnCena (Vivo OnStage): Encourages strengthening the Samba Rock genre. • P racatum Program: Promotes the socio- cultural exchange through performing arts projects. Staged in low-income communities of Rio de economic transformation of young persons, Seven different plays were staged, attracting Janeiro, these free concert of singer Sylvia showcasing the cultural heritage of the Candeal 75,000 spectators at over 260 performances in Patrícia and her guests (such as Leila Pinheiro, neighborhood in the city of Salvador, Bahia (BA) 16 Brazilian cities. Zelia Duncan, Paulinho Moska, Jussara Silveira, through music and elements of its local reality.
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Professionally-led, technical education courses MUSEUMS abroad, 300 individual customers who activated in musical instruments were conducted at the • T he São Paulo Museum of Modern Art Vivo’s International Roaming Travel Combo secondary school level with certificates issued (MAM): As a museum sponsor, Telefônica makes International, multinational clients and Movistar, 50 by the Ministry of Education. secondary level possible the mounting of major exhibitions won tickets to those matches. sociocultural Ministry of Education. In total, 200 young and other activities, such as social activities, According to IBOPE Repucom image results for projects people and adults received instruction. educational programs and accessibility initiatives. 2015, Vivo ranked in 2nd place for spontaneous MAM, whose collection includes over 5,000 media coverage. The encounter between “mini • State of Bahia Youth and Children’s works by significant artists in the field of David Luiz” (recognized as the star player’s pint- across Brazil offered Orchestra Centers Neojiba: Núcleo Inspires contemporary and modern art from Brazil and sized lookalike) with his idol garnered the brand access to Brazil’s children, adolescents and young adults through around the world, has reinforced its reputation over 3 million unique views, while a photo post of cultural heritage lessons and presentations on instrumental music. as a major presenter of this type of art. the encounter by Luiz on Instagram was the third More than 4,500 beneficiaries in orchestral liked in the country. and choral practice centers. COMMERCIAL SPONSORSHIPS The aim of commercial sponsorships is to • Tennis - Incentive Sponsorships: In 2015, in • Belo Horizonte’s International Chamber Music contribute to brand building, strengthening the world of sports, Vivo began to offer its support 75,000 Week: Showcased the variety of concert music for its attributes with various stakeholders, for tennis. With the arrival in Brazil of the ATP small groupings of instruments over the centuries. seeking to position Vivo as a leader that World Tour 500, Rafael Nadal, came, too. As the Concerts held in several cities across the state supports innovative, yet evergreen projects, Telefônica Group’s global brand ambassador, Vivo spectators of Minas Gerais featuring pianist Simone which offer unique benefits to customers. held an exclusive Meet & Greet for strategically Leitão and musicians from Venezuela, Italy, invited guests. With the objective of exploring in 16 Brazilian cities attended England, Croatia and the United States. • Brazilian Soccer Team: Vivo – through its the potential benefits of this type of activity for over 260 performances of sponsorship of the Brazilian national soccer team, high-value customers, as well as relationship stage plays, as part of Vivo • Caymmi Music Award: Revives the tradition of which is playing in 2018 World Cup qualifying building activities with various stakeholders, we EnCena (Vivo OnStage) old festivals with the aim of strengthening and matches, both in Brazil and abroad – has carried used incentive funds to sponsor 10 tournaments giving recognition to those on the music scene in out several brand activation activities which paired during the course of the year. At these, we were the state of Bahia. well with results on different commercial fronts. able to generate over 1,800 qualified leads by Recognize, strengthen and award new Bahian The Vivo Values Relationship, points redemption offering opportunities for a variety of services music productions, showcasing new creations. program, benefited over 1,600 customers who to be sampled – Vivo Fibra, 4G and Vivo Values Inspired by the history of musical awards and the secured tickets to the four matches that have Relationships Program loyalty initiatives. Support master musical awards and the Bahian master been played in Brazil and provided unforgettable was also provided to the the Instituto Tênis of Música Popular Brasileira, Dorival Caymmi. experiences, such as dinner with vice-captain (Tennis Institute) as a way to encourage the The award seeks to stimulate a dialogue on the for the Brazil national team, David Luiz. sport’s practice and the training of young Brazilian cultural needs of Bahia’s cultural marketplace. Additionally, in the six matches that were played tennis players.
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• Vivo Open Air: An initiative 100% supported originals. Released to radio stations in São Paulo, sampling activities for its many services – through Brazil’s Federal Cultural Incentive (or Rio de Janeiro, Minas Gerais and the Federal 4G, Nuvem do Jornaleiro (an original, online Rouanet) Law, returned to São Paulo after District, “Exagerado 3.0” rose to become one of newsstand app), Vivo Música, Vivo Fibra and 7 editions were across Brazil over the past 3 the 5 most played songs on the radio and the Vivo TV Fibra. During the second half of the years. For 18 days, over 22.00 people attended most played in Rio de Janeiro. For the release year, the city of Recife, considered the largest 110,000 a program of cinema classics, blockbusters of the film, “Exagerado 4G,” in the city of Rio de technological park in Brazil, played host to the PEOPLE and domestic and international premieres, Janeiro, Vivo presented, with sponsorship from event for the fourth time. From July 23-26, there followed musical performances and cuisine. Circo Voador on Arpoador Beach, a replica of were 4,000 “campuseiros” and 2,500 others who attended The return of Vivo Open Air to Sao Paulo was the performance space where Cazuza began participated in 250 activities, which featured 224 highlighted in the city’s principal press outlets his career. Circo Voador, now in Rio’s trendy and presenters and over 300 hours of content . 119 shows and generated spontaneous media worth over bohemian Lapa district began its life in Apoador, R$ 6M. More than 2,000 high-value customers where it launched the careers of national artists • Vivo Rio: Considered one of the best concert of diverse were welcomed to the exclusive V Lounge and, and transformed the culture of Rio in the 1980s. halls in Brazil, Vivo Rio, which gets its name exclusive), and during the season, attendees Then, as today, Circo Voador (literally, Flying through sponsorship naming rights secured musical were able to confirm their activations of Vivo Circus) was more than a concert venue, hosting in 2006, is a 5,000-person capacity, 11,000 4G, Vivo Música and Vivo Fibra services through cultural workshops, plays, debates and more. It m² space in Rio de Janeiro’s Flamengo genres innovative and digital activities. As a filmgoing offered an intense schedule and a dizzying array neighborhood. In 2015, the venue welcomed event, popcorn was, of course, available was of activities – all totally free. The 2015 Exagerado over 110,000 attendees of 119 shows that served by the Vivo Values Relationships event was attended by more than 4,000 people featured a diverse array musical genres. Program, which also offered 25% 25% discounts with thousands more enjoying the show via Throughout the year, relationship activities on ticket purchases. Research conducted by the screens installed all along Apoador Beach. The were carried out with various stakeholders, Bridge Research Institute, found Vivo Open Air secured 47.5 million views on YouTube, making both individual and corporate subscribers, and was considered to be totally innovative, adding it the most watched in Brazil. The event was exclusive benefits (such as 25% discounts on value to brand for 99% of those interviewed. covered in 300 different press reports nationwide. ticket purchases) were offered to registered Vivo Values Relationships customers. • Exaggerated Brand Content: In 2015, this • Campus Party: Sponsorship for the 8th project moved the Company’s content branding consecutive year of the main event for strategy forward with an initiative honoring the technology, innovation and the digital late Brazilian singer-songwriter, Cazuza honored entertainment world. It welcomed approximately Our activities transform society, connecting with a novel re-release of his very first single, 8,000 “campuseiros” from 21 countries. There “Exagerado” “Exaggerated), which kept this was also a free space visited by over 100,000 cultures and individuals; encouraging leisure, artist’s voice alive, still ranking among the great people who had access to 12 stands and 63 musicians in the Brazilian pantheon of notable lectures/workshops. Vivo created interactive creativity and social inclusion
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Disaster preparedness and response_
Though service disruptions can happen, country. Through Vivo Clima (Vivo Climate) we take preventive actions to maintain the Machine-to-Machine (M2M) technologies and We have a contingency plan for situations integrity of our network and restore service 3G/GPRS, risk area rainfall data is reported to quickly and efficiently when an interruption CEMADEN in real time. Between moderate, such as accidents, natural disasters, occurs. Good management is a prerequisite for high and very high alerts, in 2015, system- customers, public and civil defense authorities issued alerts totaled 645 for land movements, power outages and security breaches – all need to stay connected, particularly 568 for rainfall, and 549 for rainfall/land in the event of a major disaster. We have a movements combined. contingency plan in place for situations such as accidents, natural disasters, power supply disruptions, and security breaches.
Our network management centers – in São Alerts in 2015 Paulo, Brasilia and Minas Gerais – monitor transmission operating parameters, service platforms, network access and infrastructure. They are able to identify system abnormalities through a fault monitoring and alert system.
PARTNERSHIPS INTENSITY ALERTS Brazil’s National Center for Monitoring ALERTS BY TYPE and Early Warning of Natural Disasters (CEMADEN) and Telefônica Brasil established a partnership in 2013 to prevent disasters caused by global warming and to ensure monitoring and the issuance of public alerts in cases of landslides and floods. By the close Very high Moderate Rainfall Land of 2015, 2,688 rain gauges with 3G chips 58 1,408 568 movements (1,500 of them using our data network) had High 645 been installed in schools, federal government 296 Rainfall/ buildings and radio stations. Communicating land movements to a company base, these were situated in combined the risk areas of 957 municipalities across the 549
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Customer 5_ approach
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To be globally recognized for the transformative Our Value Proposition customer experience we offer, our company works to ensure delivery of the best connectivity and a ready supply of bundled communication Provide quality services, with connectivity and and digital service solutions. Positioned as “We choose to Reinvent” (lean more on p. 23), we excellence, through a bundled offer that provides assess existing operational patterns and best market practices to establish a business model customers a unique experience. that is fully focused on the satisfaction of our customers.
Currently, Telefônica Brasil has a total Excellence in Values and Bundled subscriber base of 96.5 million customers 1 connectivity 2 experience 3 offer nationwide.
A major lever to strengthen our customer commitment is our Quality Plan, which we released in July 2015. Its ambition is to create a process for transformation and continuous RATE OF CONTACT* CALL TRANSFER* REDIAL* improvements within the company. 18% 12% 21% 43% 15% 29% The first months of the plan’s implementation demonstrated that with Cellular focus and determination, we can bring about Fixed significant changes in the levels of quality we *Individuals offer to our customers.
Dec14 Mar15 Sept15 Dec15 Dec14 Mar15 Sept15 Dec15 Dec14 Mar15 Sept15 Dec15
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Quality Plan_ G4-PR5
As a means of monitoring the results of CUSTOMER CARE As regards telecommunications sector problems PERCEIVED QUALITY AND SATISFACTION our Quality Plan we carried out a monthly As regards customer care, we are working to solved , we our proud of our 92.29% leadership (PRE-PAID AND POST-PAID) Customer Satisfaction Index survey8, which integrate systems used in these operations – ranking in the city of São Paulo with the produced a score of 7.39 (on a 1 to 10 better defining processes and business standards Fundação PROCON (Consumer Protection and POST-PAID scale). This demonstrated consistent growth to internalize and business practices considered Defense Foundation). Leadership rankings were 7.02 6.44 6.73 6.26 throughout the year. essential to transforming the customer experience also achieved in the state of São Paulo, both for through all channels and points of contact. Telefônica/Vivo and GVT, whose scores stood This result indicates that the Telefônica Brasil at 89.18% and 91.72%, respectively. All of this, is heading in the right direction, listening to its We are working continuously to expand, combined customer satisfaction survey results, customers and delivering a positive experience standardize and integrate our customer care demonstrate that we are able to transform the with its brand. channels. Among the main actions we have contacts we receive into a positive for our brand. taken are: In 2016, Telefônica Brasil will continue with In 2016, we will continue to enrich our customer a variety of strong, focused initiatives and • Expanding the SMS channel to our entire care content and expand resources available to activities to continually transform the subscriber base, providing them with yet another each of our service channels, working to evolve Vivo PLAYER 2 PLAYER 3 PLAYER 4 customer experience. contact option. an interactive agility between them, such that our customers can be assured of obtaining
CUSTOMER SATISFACTION INDEX • Rolling out a new version of our direct access the same standard of response and quality of PRE-PAID cellular app. By December, it had already service across the entire portfolio. Our focus is on 7.06 6.98 7.06 7.22 7.39 registered 9 million contacts. accelerating the digitization of customer care, 6,80 6,52 6,57 6,58 offering more flexibility, standardization and • Refining the assertiveness and scope of the convenience – all of which are decisive factors for Virtual Vivi assistant, which now produces a hit increased satisfaction. rate (in terms of accuracy) to over 90% of the customer care requests made of it.
Moreover, we are resolving customer problems more quickly and efficiently, providing answers to over 60% of questions posed to our Vivo PLAYER 2 PLAYER 3 PLAYER 4 electronic Relationship Central customer care service. And this does not include the evolution (8) The Global Methodology for the Telefônica Group’s Source: Brazilian National Telecommunications Agency Customer Satisfaction Survey is based on the 1-10 scale (ANATEL) survey of cellular customers (pre- and post-paid) of our customer care outreach via social or the of the American Customer Satisfaction Index (ACSI). The Dec14 Mar15 Jun15 Sept15 Dec15 expansion of our online forum. survey was conducted with 8,000 customers .
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AVERAGE COMPLAINTS (CELLULAR) OMBUDSMAN Per million customers
0.5 86 % 92.29 % Our ombudsman’s office serves those customers who have already sought
0.4 0.49 solutions from our Relationship Central, of cases registered of questions but are not yet totally satisfied. In 2015: 0.3 with the ombudsman and concerns Our Ombudsman registered 652,702 requests and resolved, in partnership with 0.33
0.31 appropriate divisions, 86% of those cases 0.2 were settled within registered with PROCOM in the within five business days. five business days city of São Paulo were resolved
0.1
0
2013 2014 2015
AVERAGE COMPLAINTS (FIXED) REQUESTS RECEIVED BY THE OMBUDSMAN Per million customers 564,067 22.6 89% 595,604 22.7 87% 652,702 27.4 86% General Requests
2.0 Quantity (parts per million)
1.5 >% resolved within
1.63 five business days 1.47
1.0 1.36
0.5
0 2013 2014 2015 2013 2014 2015
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Stores_ Inclusion_
Vivo’s company-owned stores are designed to A savings of R$ 2.7 million have been The company currently offers 2,400 collection Different services and communication channels offer the best shopping experience through achieved through 2,523,520, digitally-signed points installed in Vivo stores (company-owned offer special tools and accessibility options for innovation, quality, comfort, accessibility and contracts. and resellers) in all regions of the country. persons with disabilities. sustainability. • The Vivo website is 100% accessible and The goal for 2016 is to extend this process to In 2015, the program collected 131,000 items conforms to W3C10 accessibility guidelines;10 Currently, there are 32, bricks-and-mortar major retailers and, by year’s end, to register a (devices and accessories), which corresponds to • Dedicated, Customer Care Center telephone stores whose construction adheres to volume of 200,000 digitally-signed documents 7 tons of waste. Between 2006 and 2015, a total number for visually and hearing impaired sustainability criteria, among which are: per month. of 1 million devices and 3.5 million other items persons. • 100% recyclable floors that feature FloorScore were collected. The material is sent to a storage certification9; DIGITAL BILLING center in the state of São Paulo, where items are In addition, the company offers special products, • Furniture made with certified wood; Digital billing reduces the amount of printed sorted and then sent for recycling. such as Torpedo Recado that transforms • Furniture with coatings produced from paper generated and also provides a modern voicemail messages into SMS text and targeted recycled plastics; tool for mobile customers and individuals The recycling volume still does not track with plans, such as Vivo Mais Mensagens, which is • LED lighting, which consumes up to 85% less looking to review their bills, payment histories cellular phone sales in Brazil, with less than 1% specially designed for hearing impaired persons, power than other types of bulbs; and other information via their electronic of recycled material being generated. Therefore, allowing them to to communicate via text • Digital communications, which reduce the devices – anytime, anywhere. In September Telefônica Brasil is planning an initiative with messaging at promotional rates. need for hard copy printing and produces 2015, billing statements began being sent by customers to encourage them to turn-in such (10) The World Wide Web Consortium is a savings by reducing the demand for paper, e-mail, ensuring still more convenience for our equipment. standardization organization for the creation and ink and other inputs. customers. In 2015, we avoided the printing interpretation of internet content. of 40 million billing statements, thus reducing (9) Certification that ensures that materials do SUSTAINABLE SALES the consumption of approximately 80 million not impair air quality. All company-owned stores have adopted the sheets of paper. Sustainable Sales system, which allows for document management via tablets. The tool REVERSE LOGISTICS GRI G4-EN28 simplifies the business process, reduces costs In 2016, the Reciclar Pega Bem (Recycling is and service time, as well as eliminates paper use. Cool) initiative became Reciclar Transforma 100% 32 (Recycling Transforms). It is one of the main Just one year after deployment, in almost projects demonstrating Telefônica Brasil’s of public stores feature all company-owned stores, Sustainable Sales commitment to solid waste management. telephones has produced impressive results. In total, the The program, which was introduced in 2006, reduced environmental company avoided the use ofh 10,094,080 aims to collect cell phones, batteries and impact characteristics sheets of paper through the new, digital accessories for recycling as material for new have been adapted for the signature process. products. visually impaired
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Responsible use_G4-PR1
Among the major challenges of the digital (Dialoguing) is another initiative, whichevolved To collaborate towards the establishment age areissues such as the conscientious use, from a pioneering GVT programfocused on the of a saferinternet environment for children privacy andsecurity for people operating in the responsible use of the internet.Its objective and adolescentswe signed – together with online environment – Of particular concern is to stimulate an open dialogueamong other telecommunicationsfirms, government US$ are vulnerable groups, such aschildren and adults, young people and children about agencies and Safernet – the Mutual Cooperation 375 BILLION adolescents. theconscientious use of the internet. Agreement Against Pedophilia. estimated In an increasingly connected world, we want The portal addresses, transparentlyand Among other activities, noteworthy is our toencourage the proper use of our services objectively, significant issues related tobehavior channel where one can anonymously report minimal, annual throughout our value chain.Management in the digital world, such asaccessing onwebpages, chats, documents and other costs incurred focuses special attention on thesematters and inappropriate content,overuse of networks. spaces onthe internet that contain images or due to the performance of our company is critical in our caution as regardsonline relationships, sexuality contentthat represent a risk to this audience. 11 promoting an affordable and secure internetfor on the network,privacy and online games. To file a formal report, simply access digital crime all audiences. www.safernet.org.br/site/denunciar. The purpose of Dialogando is not toestablish In 2015, one of the highlights in this area usage rules or prohibitions, butcontribute in a was the launchof the #UsarBemPegaBem meaningful way, assisting responsible adults (‘Responsible Use is Cool’) campaign, whose aim to establish an ideal dynamic that will allow is to raise awareness aboutthe proper use of them to broach these topics with teenagers cellphones. and children. Content is madeavailable in an innovative and attractive way,through texts, The increased exposure of the campaign podcasts, downloadable materials and even occurred with therelease of the YouTube video, talk shows with experts on theseissues. The “Vamos falar sobre isso? (“Let’s talk about it?”) site also maintains an open channel,offering The Dialogando portal (http://dialogando.com.br) Celular #UsarBemPegaBem, whichafter four users the opportunity to contribute their days got more than 1 million views. ownsubject ideas and questions. encourages open dialogue between adults, young people and children on conscientious internet use and addresses The #UsarBemPegaBem campaign, initiated Dialogando offers content developed in January 2015, offers weekly posts on the inpartnership with the following entities:Catraca key issues linked to behavior in the digital world. internet and via social networks on topics such Livre (Free Turnstile), Committee for as the use of cell phoneswhile driving, one’s theDemocratization of Information Technology (11) Source: Net Losses: Estimating the Global Cost of Cybercrime, Center for Strategic and International relationship with cell phones, smallaccidents (CDI), Humaniza Networks, Safernet Brasil and Studies; McAfee, June 2014. and cellular use by children. Dialogando Twitter.
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Digital trust_G4-PR1
In an increasingly digital world, it isimperative for This new staff position was created with TRAINING AND AWARENESS responsible behavior in relation toinformation people to have confidencethat their data is private, the goal of defining a corporate strategy for On our official website, Vivo Portal de security, with training provided to administrative secure and being managed in a transparent manner. the management and personalization of Segurança(Vivo Security Portal), we offer employees, company-owned stores and Trust is to keyfor people to take best advantage of digital products and services, which is based news, advice, videos and educational guides suppliers. theopportunities that technology offers. on transparency and customer control of to sensitize ourcustomers to this subject. Our personal data. employeesare involved in internal campaigns on We were the main sponsor of Mind the Sec,a Our goal is to ensure the privacy ourcustomers corporate event on information security and ensure transparency in theirrights to in Brazil, which was held from August use our products and services.All this within 26-27at the Grand Hyatt São Paulo and a secure environment thatgives customers attendedby notable industry figures, such control over their digital lives. as Eugene Kasperskyand Bruce Schneider, DIGITAL TRUST who discussed security-relatedmanagement PRIVACY issues, information technologyand solutions. Our commitment is expressed in ourPrivacy Our company also participated in the public Policy, which describes the type ofinformation consultation on a personal data protectionbill, we handle, as the why, how andwhere it is offering suggested changes to the draft handled. Approved in March 2013, in2015 it was legislation. updated to be further in alignmentwith new industry challenges. FREEDOM OF EXPRESSION During 2015, we worked to supportprivacy and In 2015 under the supervision of the Global freedom of expression,actively participating Privacy Committee, we implementedan internal PRIVACY SECURITY TRANSPARENCY in Telecom Industry Dialogue (TID), a data protection standard. Itestablished concrete, telecommunications sector roundtable. We mandatory measures to be implemented and also participated in the with the Global Network adhered to throughoutthe company. We endeavor Initiative (GNI).Starting in 2016, TID members to ensure that personaldata is handled appropriately will have GNI observer status, a significant and that guidelinesset forth in legislation is followed. development inthe advancement of privacy and freedom of expression. Oversight of Privacy Policy implementation is We address the digital trust from the standpoint the responsibility of Telefônica’s Chief Privacy of sustainability, ensuring that citizens have In the following table, you can learn more Officer.Nevertheless, mindful of the increasing control over their digital lives about our progress in implementing the 10 IT importance of economic data, we have privacy and freedom of expression principles appointed a Chief Data Officer. adopted in 2013:
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TELEFÔNICA’S GUIDING PRINCIPLES privacy policy principles,Telefônica works, A respect for and commitment to human To the degree possible, we FOR PRIVACY AND FREEDOM within the legal context ofeach country rights is a cornerstone of our Responsible adoptstrategies to anticipate, Of EXPRESSION in which it operates, to ensure the proper Business Principles.Therefore, in keeping with respond to andminimize potential handling of personal data.Our Chief Privacy the structure of thethe guiding principles impacts on privacyand freedom Officer is charged withimplementation for business and principles on human rights, expression when illegalgovernmental Guiding principle and monitoring of thispolicy. In addition, adopted in 2012,an assessment was carried requests or demandsare received, or the company createdthe position of Chief out (with support fromBusiness for Social when we consider thatgovernments Telefônica’s progress Data Officer, responsible for implementing Responsibility) to betterunderstand the are endeavoring to misuseour guidelines and corporate data control, as overall impact of our activities.During 2015, products or use our technologiesfor well as database storage, protectionand the following due diligenceprocedures took illegitimate purposes. design – now and into the future.As shape:Periodic, global reviews of the most In addition to formal processes set Under the supervision of the board of regards security management,we have a significantrisks to privacy and security forth inthe above-stated principle, we directors or equivalent, create and/ Corporate Policy on InformationSecurity, that affect ourbusiness. Development and have a globalChief Privacy Officer and or maintain relevantpolicies, which which is based on internationalstandards presentation by ourPrivacy Committee of a a Data ProtectionOfficer, which assures highlight the company’scommitment to and updated to satisfy increasing global procedural guidethat sets forth existing legal greater uniformity in our processes and assessing, mitigating and preventing, demands for security.We also carry out and regulatory requirements.Additionally, procedures as theyaffect our customers’ to the extent of their capabilities,risks dedicated trainingfor about these Policies our Chief Protection Officer implemented a privacy.We also created another new to privacy and freedom of expression with companyemployees who have access data protection directive. position for theGroup, Chief Data Officer. thatare associated with the design, sale to thismaterial through the corporate This individual is responsible for database andoperation of telecommunications intranet. Create and/or maintain storage, protectionand design – now and technology and services. processesand operational into the future. Our Responsible Business Principles, revised We conduct regular reviews ofhuman proceduresto evaluate in 2010, recognize the right toprivacy, rights impacts andengage in a due governmental requests,which may We endeavor to ensure the security which is based on a relationshipof trust diligence processappropriate for the impact privacyand freedom of andfreedom of expression of our with our stakeholders.The Group also company to identify,mitigate and expression. employeeswho may be exposed to risk maintains a privacy policy,adopted, in manage risks related toprivacy and We have a formal process in place to situations. March 2013, by the board of directors. freedom of expression(in terms of satisfyrequests received from local, As regards workplace health and In 2015, it was updated to bringit in technology, productsand services), governmentalauthorities, whose execution is safety, as well as the well-being of alignment the new challenges facingthe which is in accordance with the guiding the responsibility ofthe Office of the General our personnel,there are three pillars sector.We also have a set of data principles of the United Nations’ Secretary and our Security division. In 2015, at Telefônica, which ensureemployee protectioninstructions, which establish landmark Framework for Business and a procedural guide on governmental requests protection and also have direct concrete andmandatory measures to be Human Rights” – “Protect, Respect and was issued for application at all Telefônica bearingupon their satisfaction on-the- carried out by the Group. In developing its Remedy.” Group companies. job.In terms of physical security, our
53 MESSAGE FROM MESSAGE FROM 1. TELEFÔNICA 2. CORPORATE 3. RESPONSIBLE 4. COMMITMENT TO 5. EDUCATING 6. EMPLOYEES 7. SUPPLY 8. COMMITMENT TO 9. APPEN- 2015 SUSTAINABILITY REPORT THE PRESIDENT THE PRESIDENT VIVO TODAY GOVERNANCE BUSINESS SOCIETY CUSTOMERS CHAIN THE ENVIRONMENT DICES OF TELEFÔNICA OF TELEFÔNICA GLOBAL BRASIL
Security_G4-PR1
globalsecurity orientation establishesa companies’ stakeholder groups on issues of development of policies and standards that To offer our customers confidenceand certainty series of appropriate guidelines toaddress privacy and freedomexpression. Preparation of promote privacy and freedom of expression. that our products andservices are secure and risks identified in each country. a panel of stakeholdersto serve as a structured At Telefônica, we are convinced that the best containappropriate defense mechanisms,we and formal platform fordialogue with our key wayto achieve overall progress on this front possess all necessary technologyand apply an We also provide employee education stakeholders.The results of the stakeholders is throughdialogue between governments, architecture of security. and for those professional who are panel will serve toenrich materiality and industry, civil society (including human involvedwith relevant policies and planning at Telefônica, as regards global and rights experts), investors andother, affected DATA SECURITY processes. local social, environmental, ethical, and privacy interested parties.We participate in public The Corporate Security Committee is We have designed a specific plan to train initiatives. consultationsrelated to privacy and freedomof responsiblefor establishing policies, standards and sensitize our employees on policies and expression sponsored by differentinternational andprocedures for the effective and efficient processes over which they are responsible. Em 2015, também preparamos um painel de organizations.We contribute to dialogues on management (of both human resources The training program takes place in grupos de interesse que servirá de plataforma international policies in a variety of forums andmaterials) of our communications, such that personand online. de diálogo formal e estruturado para os nossos and at numerousevents related to these theyare, today, more secure and reliable. principais stakeholders. Os resultados do painel issues, at both the companylevel – in 2015, T he sharing of knowledge and servirá para enriquecer a materialidade e o the Annual Data Summit and the Global SECURITY IN OUR SERVICES impressions,where appropriate and planejamento da empresa, tanto no âmbito Dialogue on Data Protection – and though The effort we make to understandnew threats relevant, is carriedout with all interested global como em nível local nas iniciativas sociais, the Telecommunications Industry Dialogue and the latest trendsin the digital world, as parties to gain a betterunderstanding ambientais, éticas, entre elas privacidade. group,whose activities are detailed on their well as anticipatechanges with innovative of the the legal environmentand the website(www.telecomindustrydialogue.org). securitysolutions is reflected in a wide range effectiveness of these principles in Annually and as necessary, we disclose ofsecurity products and services that meetour practice,as well as to provide support for informationexternally about the progress We analyze the possibility of customers’ needs. their implementationfurther development. we have achievedin relation to these implementingappropriate mechanisms for We consider ongoing dialogue with our principles, as well as whensignificant grievancesto be registered, as described To achieve this, we have specific research stakeholdersan essential part of identifying events have resulted in noteworthy in Principle 31(“Effectiveness Criteria for anddevelopment capabilities in our digital and minimizingrisks, and developing new advancements. Non-Judicial Grievance Mechanisms”) of the security company, ElevenPath, as well as business opportunities. As a means of sharing This report summarizes the progress that “Guiding Principles on Business and Human specific developments that designed for knowledge with these stakeholders, we believe Telefônicahas made on the issues of privacy Rights: Implementing the United Nations operations, engineering and support that that transparency is thekey to advancing and freedomof expression. ‘Protect, Respect and Remedy’ Framework.” come from Telefônica’s Security Engineering these guiding principles.We would note that In 2015, we engaged in an internal division. as members of the TelecomIndustry Dialogue, A s a means of mitigating potential initiativeto establish an appropriate we participated in the “Conversationwith negative impacts derived from policies and grievance mechanism that addresses various Stakeholders” roundtable discussion, which regulations,on our own and in collaboration aspects ofhuman rights, including privacy explored the global experience of participating with other institutions, we contribute to the andfreedom of expression.
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Telefônica’s Global Privacy Policy
PROTECTING YOUR INFORMATION
WHAT WE DO HOW WE COLLECT YOUR INFORMATION WHAT TYPE OF DATA WE HANDLE WHERE DATA IS HANDLED
Promote and provide contracted services to When you contract or use our products, That which is necessary to provide, In countries where we provide services our customers enter our site, send queries or incident improve, or adjust our products to your It may be transferred internationally to Innovate and improve products we offer reports, and participate in market needs Telefônica Group companies, as well as to Internally manage our employees research Information on the use of our services, third party companies, always respecting When your information is to be used for When you browse the internet and with navigation and location, when the legislation legal regimes, contractual terms and other purposes, you will always be contacted your permission, through the use of cookies, allows, as permissible by law Telefônica security standards. and have opportunity to opt out which are used as necessary and always in compliance with the law
TRANSPARENCY RIGHTS SECURITY MINORS If your data is to be used in a manner Through our website, we inform you We manage and store your customer We work to create an environment that is different from what was of your user rights and how you can information in a responsible and that encourages the responsible use communicated to you, you will exercise them. secure manner. of the internet and cellular phones by be informed and we will obtain, as There are employees in every Group We commit ourselves to act swiftly children and adolescents. legally applicable, your consent. country responsible for responding to and responsibly if the security of your requests. information and related data is in Only we will retain your information jeopardy. ACCESS TELEFÔNICA’S GLOBAL PRIVACY and, then, only for the time permitted POLICY AT by law or, as necessary, to execute a www.Telefônica.com/ legitimate goal of our business. documents/364672/473798/ politica_privacidad_esp_2015.pdf/
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6_ Employees
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Our people are the ones who are best ableto offers opportunities without prejudice. to orient behaviors and attitudes. Adapted and Engagement Survey. It has a more transform the customer experience. Therefore, Our culture encourages the personal and to the characteristics of Brazilian reality, streamlined questionnaire, which we seek to attract, develop and retainthe best professionaldevelopment of all, regardless of management of this process is focused on consists of 32 questions focused on talent – human capital that canturn possibilities gender, sexual orientation, ethnicity or belief. maximizingthe company’s results and the skills engagementand the employee’s role as the into reality, contribute to an organization with And we seek professionals with a digital profile. of the team. protagonist of her/hisown activities and the skillsnecessary to create technology from development. the raw materialof solutions and innovations, In 2015, we engaged in the hard work With the integration of these two companies, changing the lives of people and the destinies of ofintegrating cultures, as we labored morethan 17,000 employees were incorporated The 2016 calendar also provides for the businesses for the better. to strengthen the bonding of our into ourprofessional ranks, now consisting launchof a variety of culture integration employeesfollowing the merger between of 33,800 employees Our Human Resources projects,aimed at further aligning employee Committed to plurality, inclusionand Telefônica Brasiland GVT. The strategy division took vigorous steps to integrate new directions. April is the cornerstone of this social equality, we are a company that was guided by Telefônica’sglobal efforts employees, implementing unification processes new initiative. With it, we are confident that and activitiesto support our business in this we will strengthenour leadership position in moment of significantgrowth. the Brazilian marketplaceas the company Our Value Proposition with the best professionals, who sharewith In March, we conducted a pilot sample the best professionals, all of whom share survey, along with our first transformation thethe same principles and follow the same Promote professional development, provide fair salaries study.The Climate and Engagement pilot processes. G4-10 survey showedan overall favorability index and ensure respect for human rights. of 84% and significantinformation, useful in the drafting of our Engagement Model.The official Engagement Survey was conducted inFebruary 2016, producing a favorability Professional Human “CONNECTED TO THE PRESIDENT” development 1 3 rights index of 82% at Telefônica Brasil through participation of 88%(27,698) of eligible employees. A corporate communications channel aimed at transparency and bringing critical staff in Employees Another important move was a redesign closer contact with the company’s leaders, of our Climate and Engagement Model Connected to the President presents and, togetherwith our global coordination, internal news for executives (VPs, Directors Health and the creation ofa Quarterly Transformation and Managers) who can then share key Fair salaries safety Study and a newquestionnaire, whose information with employees. 2 4 results will comprise an Annual Climate
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Our team_ GRI G4-10, GRI G4-11; G4-LA9 G4-LA12 Workplace health and safety_
Total employees We work proactively toward preventive management of labor risks related to themental and physical integrity of ouremployees. Telefônica Brasil professionalsare provided a secure working environment,guaranteed 33,847 by mechanisms, strictly adhered to, for 18,419 the prevention of accidents, injuries and 2014 2015 diseasesrelated to our activities.
Health and safety indicators G4l - LA5, GRI LA6 2014 201512
Fatalities 1 113
Age range EMPLOYES BY CONTRACT TYPE Total no. of accidents 16 181
Negotiated agreement Total no. of days lost due to workplace accidents 231 2801 35 Total no. of days lost due to any type of disability 52,457 135.771 34 30 years 25 Total no. of occupational diseases 0 0 32,437 average age 20 No. health and safety training hours 10,449 196,938 15 Absenteeism rate (units) ND 1.56% 10
5 16,987 average number 5 Health and safety committees 25 78 0 (12) The change in values in 2015 is due to consolidation of data that includes GVT, which internalizes operational positions, of years at company 2014 2015 such as installers and call center personnel. (13) The employee suffered an accident while commuting.
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Diversidade_ GRI g4-la12
Among the most important aspects of the VIVO ACCESSIBLE INITIATIVES DIVERSITY PROGRAMS PERSONS WITH DISABILITIES
workplaceis respect for diversity. We are a (2016 PLAN) 250 company that values differences, not only in Internal awareness our efforts toward greater balance in workforce This program is designed to be a permanent policy Vivo Vivo 200 in terms of gender, ethnicity, sexuality, age and to extinguish efforts focused on social action in the Women Accessible 223 persons withdisabilities, but also in respect to integration of persons with disabilities. Instead, 216 those individuals. it establishes effective mechanisms to seek out 150 persons with disabilities who possess talents that In 2016, the focus of our internal activities will will strengthen our business. 100 be on two main stakeholder groups – women and persons with disabilities (PWD). Equality 50 We want to create a mindset that challenges Respect for
VIVO WOMEN’S INITIATIVES employees with disabilities to develop 0 Women’s Empowerment Principles themselves, regardless of whether they Diversity 2014 2015 Created by UN Women and the Global were freely contracted due to a voluntary Compact, sets forth seven principles commitment or compulsory adherence to EMPLOYEES BY RACE that assist the business community to established quotas. To accomplish this, we need FOSTERING DIVERSITY CAMPAIGN incorporate values and practices that the assistance of specialized recruiting firms. Self declared Hdc % promote gender equality. Telefônica Brasil signed this agreement in March 2016. Internal census In the lead-up to Brazil’s equivalent of Asian 342 1.0% We will conduct an internal census to to Valentine’s Day (June 12), a campaign was Gender and Racial Equality Program understand the profile of our professionals. launched with support from Samsung that White 24,860 73.4% We have begun to develop an internal action Through self-declarations, we will identify used images of Brazilian singer-songwriter, plan to join with a Brazilian federal government these profiles and, with these, adapt to their Cazuza, as a means of respecting different Indigenous 32 0.1% initiative, which grants the program’s seal to integration needs, assisting them towards forms of love – regardless of age, ethnicity, Undisclosed 17 0.1% firms that voluntarily establish a model for professional achievement and the optimization gender or sexuality. equality activities. of company performance. Mixed 7,121 21.0% The video envisions the musician as a Cupid, whose mission to unite loving couples Black 1,475 4.4% on Earth. Using Cazuza’s signature tune, “Exagerado,” his character shoots arrows and Total 33,847 100.0%* arouses passions in a variety of situations. * Obs.: Afro-Brazilians (mixed + black) = 8,596 employees, which represent 25.4% of the total.
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MEN AND WOMEN Women men
%
Total by gender < 30 years 30 to 34 years 25 8000 5
7000 20 4 6000 4,773 Total 5000 3 33,847 15 6,572 3,596 20,039
4000 5,776 2 10 3000 13,808 3,962
2000 3,387 5 1 2,090 9,912 1,879 1000 8,507
Men Women 0 0 0 59.2% 40.8% 2014 2015 2014 2015 2014 2015
WOMEN IN MGT POSITIONS
Total mgt positions Women in mgt 35 to 44 years 45 to 54 years > 54 years positions 150 8 2500 500
7 120 2000 400
135 6 422 5 2,164
90 113 1500 300 6,108 4 1000 200 60 3 1,270 2 194 30 3,489 500 100 824 1 2,971 33 123 560 27 2,029 77 0 0 0 0 2014 2015 2014 2015 2014 2015 2014 2015
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Attracting, training and retaining talent_
Telefônica Brasil seeks out those with a HOURS OF TRAINING CUSTOMER INSIGHT INTERNAL RECRUITMENT professional profile noteworthy for an attentiveness to the ever more rapid 1500 transformations taking place in the In 2015, our Customer Focus initiative Through Telefônica Brasil’s Internal telecommunications marketplace, which are was introduced to better understand Recruitment Program qualified or opening up a vast universe of technological 1200 the customer experience in their direct potentially qualified employees innovation. interactions with our employees. The take on new challenges within the 900 project allows officers, directors and vice company. In 2016, with the launch of We seek innovative, team-oriented presidents to spend some time in the the SuccessFactors system’s Career
professionals, able to anticipate the challenges 600 company’s several operational areas. module, we have raised the visibility of
of change and who are genuinely interested in 1,261,253.00 these opportunities, which offers all improving the customer experience. Participants monitor technical activities, employees an added incentive to act 300 176,562.62 such as installation and maintenance, as protagonists for their own career Our leaders need to overcome barriers to customer care in stores and routine advancement. With the new platform 0 connectivity, have a positive vision for the call center activities. At the end of the in place to manage the selection business and, thus, increase the efficiency of our 2014 2015 program, a workshop is held with the process, it will now be possible for all processes. managers of visited areas as a means employees to be aware of and apply for INVESTMENT IN TRAINING of analyzing these visits and improve available opportunities in all divisions
Worldwide, a process, in partnership with the R$ thousands processes. of Telefônica – not just in Brazil, but consulting firm, Korn Ferry, is analyzing the wherever the company operates 20 profile of managers with the objective of aligning In 2015, thirty-six people, in four worldwide. their leadership characteristics with our desired groups, participated in the project –
digital profile. Based on this diagnosis, we will 15 three in São Paulo and one in Curitiba create tools to support this transformation in – Over the course of the year, sixty- 16.8 our personnel. In Brazil, in 2015, an assessment two improvement opportunities were was initiated with directors, which will continue 10 identified. Among these, 37% were in 2016. GRI G4-LA9 implemented, 48% were close being
10.5 implemented and/or in the process of 5 being standardized, while 15% are still being evaluated. The program will be extended to other levels of leadership 0 in 2016. 2014 2015
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TRAINING AND CUSTOMER FOCUS For employees operating in the areas BUSINESS PRINCIPLES Individual evaluation ofadministrative and support, there is the and development plan Professional Development Program. Created to satisfy specific demands,annual training is Employees receive training on our Throughout 2015, the Telefônica Group worked defined by eachvice president as part of a model performance principles. In 2015, 14,000 to redesign its performance assessments to that considerscompetencies and skills needed we implemented training through better align it with the company’s business for teams tofunction effectively, as well as to e-learning and video lessons. hours needs and changes taking place in the sector. assure the continuous improvement of our Monitoring of the application of of training In 2016, the new assessment system will be processes, values and organizational strategy. our principles and other corporate focused on applied in Brazil in a pilot format. norms is the responsibility of our Our Business Executive Board for Sustainability. Principles Thus, the employee development cycle (which Until the close of 2015, SELF-DEVELOPMENT WEEK will be guided by this assessment) will evolve as approximately 40% of all employees part of a shared responsibility between manager completed the course, totaling and employee, the latter being expected to seek Held in October 2015, the objective of 14,000 hours of training. support proactivity to satisfy the demands of this initiative was to contribute to the this plan. improvement of the corporate brand through a cycle of presentations, as well Feedback as to provide our employees with an At Telefônica this is an ongoing process, which opportunity for career enhancement means that everyone should have the freedom to through education to strengthen their offer and request performance reviews at any time. professional qualifications.
SPECIFIC CASES Self-Development Week took place in 20 All employees involved directly with the cities and enjoyed the participation of a little customer experience – principally the sales, over 9,000 employees One hundred and service and installation divisions, which sixty-nine activities were developed on topics represent approximately 60% of the company’s such as culture, technology, and personal operations – receive training before taking on development, which were addressed as part their responsibilities. In addition, we offer of lectures, talk shows and workshops that We seek innovative, team-oriented professionals skills enhancement opportunities to satisfy were led by 116 in-house presenters and 43 who anticipate the challenges of change and work to technical or behavioral demands necessary to consultants and external presenters. accomplishing day-to-day work. improve the customer experience.
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RECOGNITION AND RETENTION Corporate recognition We maintain a professional appreciation model that allows our employees to be directly recognized not only by their managers, but by VALUED PEOPLE PROGRAM their colleagues for the projects they develop, as well as by Vice Presidents and the President of the company, receiving symbolic gifts Valued people/ Valued people/ Valued project/ Valued people/ Valued person/ Quality (virtual medals). Sometimes they may even be Sector manager colleague trophy invited to attend events or go on trips. Vice President President trophy
In 2016 this will be the model:
Employees up to Employees up to the All Public All employees All employees All employees the managerial level managerial level employees
Evaluation Who offers Immediate Committee/ Vice President of the Evaluation Any employee President recognition? manager Executive division Committee Committee
Immediate Employees Executives Employees Employees sign up manager exchange virtual acknowledge notable Eligible in this category create initiatives for How it works chooses medals from achievements, of their are winners from the aimed at improving projects linked to a corporate gift within VPs, from completed Vice Presidential sector the experience of corporate strategies in a virtual store the system projects to results customers
10% of direct staff Unlimited, 1 winner per Limitations 1 to 3 per quarter 30 per year 6 initiatives per year per each half of quarterly category the year
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Turnover GRI G4-LA1 FAIR REMUNERATION Telefônica Brasil’s remuneration policy is HIRING DISMISSALS consistent with the market’s best practices. It seeks to attract and retain the best 993 12 12 professionals and recognize individual performace matched against the fulfillment of professionals 10 10 goals and results. The variable remuneration programs, along with a wide variety of benefits with increased remuneration, 8 8 complement the total remuneration package. in addition to applicable legal 10,579 10,466 adjustments 6 6
8,224 In 2015, 3,888 professionals were promoted and 993 were included in the in a salary increase 4 4 process, totaling 4,881 professionals who 5,671 received raises, as well as legally applicable 2 2 adjustments. 3,800 0 0 milemployees 2014 2015 2014 2015 promoted BENEFITS in 2015 TURNOVER RATE % Total remuneration includes a base salary 25 and a benefits package, which goes from health plans to private pension plans 24.3 20 24* private, on through to a Profit Sharing Program Profit Sharing, babysitting assistance and life insurance, among 4,800 15 others. In 2015, following with the employees integration of the companies, a benefits received 10 review process began and a unified plan will only be forthcoming in 2016 when salary increases 5 the corporate tax IDs (CNPJs) of the two beyond companies are unified. legal obligations 0 *Adjusted 2014 data 2014 2015
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Workplace climate_ Volunteer Program_
EMPLOYEE SATISFACTION As regards our employees, we are constantly The Volunteer Program provides a number DIGITAL VOLUNTEERS seeking to achieve and maintain a healthy initiatives that mobilize employees from several and secure organizational climate, which % Telefônica Group companies to engage in allows all professionals to develop their work 100 volunteer activities, both in-person and at a with maximum income for the benefit of our distance, enhancing the practice of citizenship. The
customers. 80 program consists several components – Volunteer 86 Committee, Volunteers’ Day, Digital Volunteering 82 1,929 As a result of our ongoing search for high (Doing Good Game) and Solidarity Holidays. 60 standards, in 2015, once again, we were cited players as being among the best companies to work Telefônica’s Volunteers’ Day is a global activity for, making the list published by the Great 40 involving employees from all Telefônica Group in the game Place to Work (GPTW) Institute. This time companies, mobilizing efforts and working to assist around, the Telefônica Group was chosen as 20 a variety of worthy organizations and causes. Since the second-best company to work for in Latin 2005, on a date chosen during October, employees America and the fifth-best in the world. The 0 focus their attentions on institutions selected in ranking is published by Fortune magazine. 2014 2015 advance by the Volunteer Committee to carry 9,000+ out activities such as renovations, construction, recreation, landscaping, storage, etc. Besides hours encouraging citizen awareness among all and dedicated assisting the lives of so many others, the initiative is an opportunity for skills development and the improvement of relationships within the company.
Another important initiative is the Doing Good Game, a platform where employees and their family members can carry out online and offline 5,496 carry out that contribute directly to societal missions transformations. nd accomplished The Telefônica Group was chosen as the 2 best The game involves issues such as education and company to work for in Latin America and the technology, digital citizenship, urban mobility, social entrepreneurship, the environment and 5th best in the world by Fortune magazine. animal welfare.
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7_ Supply chain
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Suppliers_
Our strategic plan provides for fostering the Our Value Proposition RISKS AND OPPORTUNITIES development of the productive chain in Brazilian IN THE SUPPLY CHAIN communications and encouraging the use of goods and services with national technology. We Increasingly share benefits generated in the value chain with Outsourced labor rights (in conformity with the law) understand that this is the best way to achieve our our suppliers and service providers. hours and remuneration value proposition with suppliers. freedom of association health and safety In addition, we work to promote traceability, innovation and a circular economy, while assuring Disseminate Environmental impacts risk mitigation, and the elimination of potential sustainability among Develop the licensing economic and reputational damages. suppliers production chain G4-12 1 2 hazardous materials waste recycling Promoting sustainability throughout the supply chain is increasingly a key challenge in the telecommunications industry, as concessionaires SUPPLIERS Customer trust Some suppliers represent are increasingly including suppliers and us through direct contact subcontractors in their processes. To identify and To encourage the with our customers manage risks associated with their participation use of and goods and Human services containing in our activities is essential task, especially when rights national technology Energy consumption and it comes to compliance with legal requirements 3 4 emissions associated with our operations and customer Company reductions or services satisfaction. that generating consumption savings Purchase volume (millions of euros) 2013 2014 2015 To ensure assertive diligence in the contracting Awarded purchase volume 6.89 6.76 6.34 Human rights of suppliers, we use global, procurement impacts on equipment management model, which considers a variety Locally-awarded purchase volume 6.78 6.75 6.32 and devices of concerns, such as risk management, efficient child labor production, culture of sustainability and mining in conflict zones sustainable products. Contracted suppliers (thousands of units) 2013 2014 2015 Privacy and security In addition, to orient sustainability management Contracted locally 2.95 2.03 2.05 protection of customer data in our value chain, we monitor an array of risks and Total contracted 3.05 2.07 2.09 opportunities associated with suppliers. GRI G4-EC9
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Minerals in conflict zones_ G4-HR6
Our Business Principles also guide In some instances, the processes for the extraction repairing this consequences linked to mineral ALLIES MANAGEMENT G4-SO10 us in our relationships with suppliers. and treatment of minerals represent a serious mining. Additionally, as a company listed on Accordingly, this commitment leads problem, as they can cause negative impacts to the the New York Stock Exchange, which must us to: The Allies Program is an initiative for environment and jeopardize human rights. This is fulfill the requirements of Section 1,502 transformation and commitment particularly so in the case of minerals from conflict of the Dodd-Frank Wall Street Reform and • Inform and evaluate our suppliers in with Telefônica Brasil’s collaborating zones in Africa and, as regards Indonesia, tin, which Consumer Protection Act, we are obligated to relation to the content and objectives of companies and their partners. This is is the material that main component holding follow Organization for Economic Cooperation our principles and policies to ensure that a strategic program, as approximately together circuit boards, transistors and resistors and Development (OECD) (OECD) guidelines we share the same vision. 80% of the direct contacts made with in cellular phones, as well as other technological set forth in its “OECD Due Due Diligence our customers is carried out by a third products. Guidance for Responsible Supply Chains of • Be concerned that our suppliers respect parties. Minerals from Conflict-Affected and High-Risk local laws, encouraging them to be Conscious of our role as agents in promoting a Areas” by promoting the application of these proactive and adhere to even the most Through this program, Telefônica seeks to: solution to this problem, we are working to foster recommendations to suppliers that work with demanding regulations. accountability and transparency in the supply chain, minerals. Strengthen strategic partnerships with so as to ensure the traceability of minerals used. • Encourage our suppliers to carry out allies. We have adopted a specific policy and maintain an actions of this nature in their own supply We have integrated some key industry initiatives internal management structure to monitor supply chain, so as to create a multiplier effect Ensuring compliance with that are aimed at reducing the impact and chain-related problems. that will positively impact on the social, organizational, technical and security labor and environmental aspects. objectives, as well as develop risk prevention mechanisms. In 2015, there were 3,959 administrative and 19 local audits of at-risk suppliers, Sensitize third-party firms regarding the from which 265 improvements have been necessity to comply with Telefônica’s proposed. standards.
The program ensures the fulfillment of social, labor and ethical standards, We work to promote accountability and promotes service excellence with customers and facilitates the transparency in the supply chain to guarantee 19 advancement of allied companies in terms the traceability of minerals used. accountability audits of sustainability management. in the supply chain
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Commitment 8_ to the environment
69 MESSAGE FROM MESSAGE FROM 1. TELEFÔNICA 2. CORPORATE 3. RESPONSIBLE 4. COMMITMENT TO 5. EDUCATING 6. EMPLOYEES 7. SUPPLY 8. COMMITMENT TO 9. APPEN- 2015 SUSTAINABILITY REPORT THE PRESIDENT THE PRESIDENT VIVO TODAY GOVERNANCE BUSINESS SOCIETY CUSTOMERS CHAIN THE ENVIRONMENT DICES OF TELEFÔNICA OF TELEFÔNICA GLOBAL BRASIL
Environmental Management System_
Telefônica Brasil’s environmental management In addition to offering products and services To ensure compliance of our environmental Environmental policy minimizes the environmental impact of with characteristics that, intrinsically, contribute policy with current legislation, in 2015, we began the company’s activities and maximizes to a low-carbon economy, we maintain to implement our Environmental Management We communicate in a transparent the capacity of technology to create new internal strategies to reduce our environmental System (EMS) in fixed and mobile networks in manner about our environmental opportunities for sustainable development. footprint. We accomplish this through process 50 priority municipalities, which corresponds to performance Information and Communication Technology improvements, efficient use of electricity, 62% of our total network. Its implementation (ICT) assists society to become more waste management and compliance with will ensure better management of our operations, We transform the entire value economically efficient in the use of natural environmental laws. reducing impacts and assuring stricter adherence chain with our environmental principles resources and can play a relevant role in solving to existing environmental laws. many current environmental problems. We foster digital innovation by EMS implementation started with the training of improving the environment all professionals involved and 2016 will mark the Our Value Proposition beginning of the certification process. We reduce our environmental footprint Through our products and services, contribute to a We implement environmental low-carbon economy and, with steady management, management systems to be more eco-efficient work to reduce our environment impacts. We collaborate with other organizations in the search for solutions to current environmental challenges
Eco-efficiency and Environmental We act with sensitivity in everything we do in our day-to-day operations Circular Economy 1 2 Climate Change investments GRI G4-EN31 We seek in our services a low-carbon,
less energy consumptive, less CO2 producing economy THE ENVIRONMENT R$ 13,989,006 We set environmental targets and and continue to improve them
Adherence to We are vigilant in our efforts to environmental comply with environmental laws and requirements 3 4 Green innovation other voluntary commitments
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Responsible network_
The greatest environmental impacts related to NETWORK DEVELOPMENT energy consumption, visual impact and waste is concentrated in our network. PLANNING AND OPERATIONS DISASSEMBLY CONSTRUCTION The network’s environmental impacts are managed at all stages – from design and deployment, through to maintenance and shutdown.
Whenever possible, we share our facilities R$ 1.7 m with other operators or communications 333 7,615 environmental invested in measuring tower management firms. This results in less WEEE units* visual impacts, as well as reductions in energy licenses electromagnetic consumption and waste generation. In 2015, recycled we shared 13,337 of our base stations. and permits fields R$ 9.1 m 10,200 R$ 61,4 mi invested in electromagnetic in revenue from the *Electrical and electronic equipment waste visual impact field measurements sale of operational measures carried out waste
13,300 Internal reuse radio base stations of equipment shared with
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Energy_
A key input for Telefônica Brasil’s operations, sustainability principles, which minimize 6TH GLOBAL WORKSHOP ON FREE MARKET electricity is consumed at our sites and in our environmental impacts in both the construction ENERGY AND CLIMATE CHANGE buildings is the focus of an ongoing, efficient and operational phase. use management process that is aligned with the world’s best practices. As regards renewable energy, we develop During 2015, we were a part of initiatives to reduce the consumption of Telefônica’s 6th Global Workshop on 22% In this sense, our work has two main fronts: fossil fuels in generators, replacing them Energy and Climate Change, which was of Telefônica Brasil’s • energy efficiency with cleaner sources. We also use lower held in Quito, Ecuador. The event brought • renewable energy use environmental-impact vehicles in our fleet together over 200 participants, including power consumption and enhance the generation of renewable energy managers, environmental In terms of energy efficiency, we have a team power. technology partners and other special comes from focused exclusively on developing processes to guests. During the event, Telefônica the free market improve our indices. In 2015, we consumed 1,702,075,565 kWh Brasil was recognized for its energy of energy, a 9% increase compared to 2014, management in 2015. In 2015, we did a great job of replacing which reflects the unification of GVT and Vivo. equipment for more efficient models. In 2016, our work will focus on developing a Furthermore, we currently maintain the the only business model, together with Spain, which data center in Latin America with TIER 3 facility can identify opportunities to reduce energy design and operations certification. consumption through Energy Efficiency 369,5 Services (EES). On another front, we will (14) A sustainability-focused, international initiative BILLION KWH Vivo’s Datacenter offers innovative engage in an effort to expand the number of to encourage the construction of buildings based on environmental guidelines and, thereby, inspire the of renewable energy solutions and infrastructure that makes stations in the free market. transformation of building projects, building construction economical use of resources, physical GRI G4-EN3 e G4-EN4 and building operations. purchased space and energy. It employs a modular growth concept, which guarantees Energy Consumption 2013 2014 2015 flexibility in satisfying increasing demands in a sustainable manner and to adapt to Technical areas (service delivery) - kWh 1,372,878,025 1,470,330,440 1,587,312,772 technological developments. Administrative - kWh 48,197,793 68,495,362 99,945,247 % Located in Alphaville, São Paulo, it was Shops - kWh 24,205,510 20,192,410 14,817,546 29 developed by EYP, responsible for the most Total - kWh 1,445,281,328 1,559,018,212 1,702,075,565 2016 target respected data center projects around the world. % purchased from renewable energy sources 30% 26% 22% for quantity of Its construction respected green building8 renewable energy
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Climate change_
Climate change is a global concern, where We are also signatories of an open letter from the notably a five-fold increase in company-owned Telefônica Brasil is contributing to the search Ethos Institute, in which participating companies vehicles, which are the main source of direct for efficiency in the use of resources. It drives commit themselves to control and reduce their emissions. us towards innovation, ensuring increasingly % GHG emissions and collectively lobby public consistent economic, technological, 69 authorities to establish similar requirements for Considering fuel consumption alone, in 2015, environmental and social results that foster the of the population the good of the nation. Telefônica Brasil’s use rose by a little more than responsible and healthy growth for the company, 2 million liters to a total usage of 12.7 million for the industry and society as a whole. According worldwide Almost 85% of our GHG emissions come from liters. Once again, this increase was a result of to a study published in December 2015 by the our network’s energy utilization, where supplying the merger. has access to Carbon Trust, a global organization that helps power to equipment and communications companies, governments and the public sector 3G service (2015) networks are the major sources of consumption. To reduce GHG emissions, we switched from to accelerate the transition to a low-carbon gasoline to ethanol for a part of our fleet. This economy, the telecommunications sector can Another relevant source of GHG emissions comes generated an 89% reduction in emissions have a major, positive impact on climate change. from fuel use for our vehicles fleet. from those vehicles. Since that measure was implemented, in September 2015, we have The analysis concludes that the use of % In 2015, we experienced a 280% increase in direct been able to certify our generation of 90 tons in smartphones in the U.S. and Europe has avoided 84 emissions due to the unification of GVT and Vivo; carbon credits. the emission of 180 million tons of carbon per of drivers year, an amount greater than the total annual GRI G4 EN15, EN16, EN17 emissions of, for example, The Netherlands. use smartphone apps to identify the most efficient This, at a time when only a fraction of the full Emissions (tCO2e) 2013 2014 2015 potential of emissions reductions has been routes, which results in Direct15 24,146.7 9,885.98 27,694.45 achieved. fuel savings Indirect16 138,795.18 211,220.98 211,809.12
EMISSIONS INVENTORY Other emissions17 4,733.66 7,507.2 6,419.57 To survey and identify all greenhouse gas (GHG) emission sources, we have prepared a Total 167,675.54 228,614.16 245,923.14 GHG emissions inventory, which adheres to the (15) Emissions from sources, which are the property of Telefônica Brasil or controlled by the company; the increase in Scope international guidelines of the GHG Protocol. In 80% 1 emissions is due to the merger with GVT, which has increased the size of the company-owned vehicles fleet. so doing, for the third consecutive year, we have (16) Emissions from Telefônica Brasil operations, but arising from sources whose ownership or control resides with another received the gold seal from the Brazilian GHG use their mobile devices when organization. Protocol Program. on-the-job or to study at home (17) Indirect emissions not from the generation of electricity, heating, cooling or steam.
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Life Cycle Analysis (LCA)_ G4-EN27 Water_
Vivo Telefônica is part of the Center for data, as well as information regarding Water management is carried out in a manner WATER CONSUMPTION (m³) GRI G4-EN8 Sustainability Studies (GVces) at the useful life cell phone usage and site intended to stimulate employee awareness Business Administration School of the demobilizations. and reduce consumption for more efficient Getúlio Vargas Foundation (FGV-EAESP). operations. 350
In 2015, we participated in a Life Cycle Through this study, it was possible to 300 Analysis (LCA) study, which assessed, identify that the power consumption Our buildings have equipment allowing us to step-by-step, equivalent GHG emissions of network equipment is the principal reduce consumption and avoid waste, such as 250
and, thereby, making it possible to identify emitter of GHGs and that network automatic, flow control taps and dry cleaning. 200
where, in the operation of an organization, structures, as they have long life cycles São Paulo’s Eco Berrini building and Curitiba’s 1,484,260.53 there is a greater rate of carbon emissions. (e.g., over 20 years for a metal tower), Corporate Botânico are equipped with water reuse 150 In our case, we chose to investigate produce greatly reduced impacts due systems for bathrooms and irrigation, where the 100 1,138,231.05 LTE (4G) technology use in the city of to their durability. The study was a pilot water used in sinks is collected, treated, mixed 1,154,269.55 Bertioga, São Paulo. For this, we studied project that will be expanded in 2016 to with rainwater and reused in toilets and for 50 construction site data (greenfield and better refine this approach and apply it to landscaping. 0 rooftop), operation and and maintenance to other sites. 2013 2014 2015 In 2015, due to water crisis, we reduced water consumption in our operations by 1.38%. In one of our divisions, we implemented a home office initiative; at some sites the water cooling systems were replaced with forced ventilation, as well as the expanded deployment of flow control taps in 91% 81% 49% the restrooms. 346,000 have replaced have replaced use digital media digital photography alarm clocks instead of physical m3 cameras with smartphones products, such as print with smartphones publications, printed and reduction in water music players consumption compared to 2013, even with the Source: Mobile Carbon Impact GVT/Vivo merger Survey– Carbon Trust
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Waste_
In all our activities (network, office and Waste generated by Telefônica Vivo (tons) ELECTRONIC WASTE customers), we generate waste and have unused Paper and cardboard According to the United Nations, of the 42 equipment, which represent a very relevant million tons of e-waste generated annually, Recycling 33 aspect of our environmental management and only 12% is recycled. We believe that the are critical to the circular economy. Disposal and landfill 0 responsibility for solving this problem must Cables and metal be shared society-as-a-whole. Some may have dangerous components Recycling 6,238 (e.g., batteries, etc.). Our main challenge is Most of the devices used in our operations Disposal and landfill 156 to reduce waste generation and promote a and by our customers have been recycled circular economy through our support for reuse Batteries or reused. The dynamics of the circular and recycling. To achieve this, we encourage, Recycling 555 economy will result in an increase in reuse in whenever possible, practices that encourage Disposal and landfill 0 the coming years. the reuse of equipment, both in-house and among our customers. E-waste In-house e-waste 42 Where reuse is not an option, recycling is, of Fluorescent bulbs course, the best alternative for dealing with waste. LEARN MORE Recycling 121 Thus, in 2015, we generated 7,145 tons of waste, of which 97.8% was recycled. GRI G4-EN23 TOTAL 7,145 Learn more about Vivo’s initiative to encourage the recycling of used cellular phones: WASTE GENERATED BY TELEFÔNICA BRASIL tons Waste Electrical and Electronic Equipment (WEEE) http://vivo.com.br/reciclarpegabem WEEE from Operations Recycling Units 7,615 Disposal and landfill Tons 154
Recycled WEEE from Administration 97.8 Recycling Tons 42 Disposal WEEE from Customers and landfill Recycling Units 646 2.2
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Electromagnetic fields_ G4-PR1
REVERSE LOGISTICS resellers – a project known until the close of 2015 Radio signals, such as those for cellular are no risks to health. All of Vivo Telefônica’s One of the main environmental risks in the as Reciclar Pega Bem (Recycling is Cool). phones, are electromagnetic waves emitted antennas are in compliance with these limits, telecommunications arena is associated with from antennas, which are the result of in Brazil, as well as all of the countries in which e-waste disposal, particularly home-use Telefônica Brasil is responsible for removing pay electric currents supplied to transmitting it operates. equipment associated with pay TV, TV and broadband equipment, as well. There equipment. broadband and cellular services. are over 30,000 locations with equipment – The main limits established by these entities frequently with two or more devices installed. Throughout our lives we are exposed to are the Specific Absorption Rate (SAR), used The reverse logistics process takes place along This volume demands a large reverse logistics electromagnetic wave emissions, not only primarily for measurements in the laboratory; two fronts – equipment removal by Telefônica effort, which is used not only to collect the from cell phones, but a variety of sources, and power density, mostly used for field Brasil from use locations (residences, commercial equipment that needs be replaced, but reuses both natural and artificial. Sunlight is a natural measurements. Once one of the limits is sites, buildings, etc.) and delivery of cellular the used items when they are still in working source, just as TVs and AM/FM radios are respected, the other is also automatically given phones and accessories to all Vivo stores and order and applicable for further use. artificial sources. What differentiates the the as being equally respected, as one is derived radiation emitted from each of these is their from the other. Telefônica Brasil’s towers In this case, sorting is carried out, selecting operational frequencies and the energy that have a power density limit of 4.35 W/m². those items that can potentially be reused each possesses. Throughout 2015, the company conducted in other facilities. Those selected are sent for 10,239 electromagnetic field measurements maintenance assessments and another round of Electromagnetic frequency radiation above to verify that they are operating within 1.3 sorting to select those pieces of equipment that 1,016Hz (ultraviolet radiation) is considered appropriate parameters. Million can returned to operation. Those not selected are ionizing, as it has enough energy to break the sent along for proper e-waste disposal. molecular bonds of the materials on which it pieces of equipment is focused. Cell phones emit waves below this recovered in 2015 Throughout 2015, we collected a total of 1,332,138 frequency and are classified as non-ionizing, pieces of equipment; the 2016 goal is 1,628,681. with an operational frequency that is, at least, 3 million times less than the frequency at Phones, batteries, modems and accessories have which electromagnetic radiation is considered all been part of the Reciclar Pega Bem project, to be ionizing. All Telefônica Vivo operational which seeks to recycle disused equipment that bases were installed in accordance with 1.6 would otherwise be discarded and, when recycling criteria established by the International Million is not an option to dispose of such items in an Commission on Non-Ionizing Radiation environmentally sound manner. Vivo was the Protection (ICNIRP), the independent advisory recovery goal for first operator to deploy a program of this type, body to the World Health Organisation equipment in 2016 beginning with a pilot initiative it launched in 2006 (WHO). The criteria include electromagnetic and, in Brazil, in 2008 (learn more on p. 43). field exposure limits to ensure that there
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9_ Appendices
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Principles for the development of this report_ G4-28, G4-29, G4-30, G4-31, G4-32
This report was prepared based on the PERIOD CONSIDERED methodology of the Global Reporting Initiative, whose guidelines are currently in their fourth version, known as GRI G4. Telefônica Brasil’s Sustainability Report is published annually. This edition The content includes 35 items of general content considers performance for the period (strategic and analytical information, organizational between January 1 and December 31, profile, identified material aspects and their limits, 2015. stakeholder engagement, report profile, governance and ethics and integrity). We also reported on 53 economic, social and environmental performance indicators, as well as the forms of management for material aspects, about which this document Contact adheres to essential, Core option guidelines. Readers that want to ask questions or Additional guidelines orienting this publication comment on the practices described in are those for integrated reporting established by this report may write na e-mail to International Integrated Reporting Council (IIRC), sustentabilidade.br@Telefônica.com a multistakeholder, international organization that defined a protocol with principles for reporting and analyzing integrated performance. The objective is to expand the informational transparency and the competency level of organizations to generate value over the short, medium and long term. In this report, we have improved our communication, using a clear and focused approach on material issues to the business, and presenting objective content.
In this edition, we have presented our value propositions for each of our strategic stakeholders. We will continue to evolve our approach in the coming years to provide an increasingly integrated analysis of both financial and non-financial aspects.
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GRI Summary_
External Aspect Description Page/Response UN initiatives Omission verification GENERAL STANDARD DISCLOSURES
Strategy and analysis G4-1 President’s Message 4,6 Yes
G4-3 Name of the organization 9 Yes
G4-4 Brands, products and/or services 10 Yes
G4-5 Organization’s headquarters location São Paulo, SP Yes
G4-6 Countries where the organization operate 9 Yes
G4-7 Nature of ownership and legal form 9 Yes
G4-8 Markets in which the organization operates 9 Yes
G4-9 Scale of the organization 9 Yes Organizational profile G4-10 Profile of the employees 58,60 Yes
G4-11 Percentage of employees covered by collective 58 Yes bargaining agreements
G4-12 Description of organization’s supply chain 67 Yes
G4-13 Significant changes 9 Yes
G4-14 Description of precautionary principle 30 Yes
G4-15 Charters, principles or other external initiatives 5,7,31 Yes
G4-16 Participation in associations and organizations 32 Yes
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External Aspect Description Page/Response UN initiatives Omission verification G4-18 Process for defining report content 29 Yes G4-19 List of material aspects 29 Yes G4-20 Aspect boundary within the organization for every 29 Yes material aspect G4-21 Aspect boundary outside the organization for every 29 Yes material aspect Any significant changes with respect to the data reported in previous years and changes in the basis of calculations or G4-22 Restatements of information provided in previous reports Yes in indicator measurement techniques are outlined in the text and tables of this report. G4-23 Significant changes in the scope and boundaries of mate- 9 Yes rial aspects in relation to previous reports G4-24 List of stakeholder groups engaged by the organization 29 Yes G4-25 Basis for identification and selection of stakeholders with 29 Yes whom to engage Stakeholder engagement G4-26 Approach to stakeholder engagement 29 Yes G4-27 Key topics and concerns raised through stakeholder 29 Yes engagement, by stakeholder group G4-28 Reporting period 78 Yes G4-29 Date of most recent previous report 78 Yes Report profile G4-30 Reporting cycle 78 Yes G4-31 Point of contact regarding the report or its contents 78 Yes G4-32 “In accordance” option, GRI Content Index 78, 79 Yes
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External Aspect Description Page/Response UN initiatives Omission verification The report was subject to a limited G4-33 Organization’s policy and current practice with regard to assurance by Independent Auditors Yes seeking external assurance for the report Governance (see p.86)
G4-34 Organization’s governance structure 19 Yes
G4-56 Organization’s values, principles, standards and norms of 9,19,33 Yes behavior G4-57 Internal and external mechanisms for seeking advice on Ethics and integrity 33 Yes ethical and lawful behavior G4-58 Internal and external mechanisms for reporting concerns 33 Yes about unethical behavior
SPECIFIC STANDARD DISCLOSURES
Category – Economic
Economic performance G4-DMA Management approach 22 Yes
G4-DMA Management approach 22,23 Yes Indirect economic impacts G4-EC7 Impact of investments in infrastructure offered for 38,39 PG 7, sdg 3, sdg 8 Yes public benefit
G4-DMA Management approach 67 Yes Procurement practices G4-EC9 Policies, practices and proportion of spending on local 67 Yes suppliers
PG = Pacto Global / ODS = Objetivos de Desenvolvimento Sustentável
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External Aspect Description Page/Response UN initiatives Omission verification Category – Environmental G4-DMA Management approach 72 PG 8, sdg 3, sdg 7 Yes Energy G4-EN3 Energy consumption within the organization 72 PG 8, sdg 3, sdg 7 Yes G4-EN4 Energy consumption outside of the organization 72 PG 8, PG 9 Yes G4-DMA Management approach 74 PG 8, SDG 3, SDG 6, SDG 14 Yes Water G4-EN8 Total water withdrawal by source 74 PG 8, SDG 3, SDG 6, SDG 14 Yes G4-DMA Management approach 73 PG 8, SDG 3, SDG 7, SDG 12 Yes G4-EN15 Direct greenhouse gas (GHG) emissions 73 PG 8, SDG 3, SDG 7, SDG 12 Yes Emissions G4-EN16 Indirect greenhouse gas (GHG) emissions from energy 73 PG 8, SDG 3, SDG 7, SDG 12 Yes acquisition G4-EN17 Other indirect greenhouse gas (GHG) emissions 73 PG 8, SDG 3, SDG 7, SDG 12 Yes
G4-DMA Management Approach 75 PG 8, SDG 3, SDG 7, SDG 12 Yes G4-EN23 Total weight of waste by type and disposal 75 PG 8, SDG 3, SDG 14 Yes Effluents and waste method G4-EN24 Total number and volume There were no significant spills PG 8, SDG 3, SDG 14 Yes of significant spills in 2015. G4-DMA Management approach 74 PG 7, PG 8, PG 9 Yes G4-EN27 Initiatives to mitigate environmental 74 PG 7, PG 8, PG 9 Yes Products and services G4-EN28 Percentage of products sold and their packaging 50 Yes materials that are reclaimed by category G4-DMA Management approach 33 PG 8, SDG 3, SDG 12 Yes In 2015, there were 317 sanctions against Telefônica for violation of Compliance G4-EN29 Value of fines and total number of sanctions environmental legislation. However, PG 8, SDG 3, SDG 12 Yes for noncompliance with laws the company did not have to make payments for financial sanctions related to environmental legislation.
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External Aspect Description Page/Response UN initiatives Omission verification G4-DMA Management approach 70 PG 7, PG 8, SDG 3, SDG 12 Yes Overall G4-EN31Total investments and spending on environmental 70 PG 7, PG 8, SDG 3, SDG 12 Yes protection Environmental assessment of G4-DMA Management approach 67 PG 8 Yes suppliers Category: Social – Labor Practices and Decent Work G4-DMA Management approach 22, 61, 63 PG 6, SDG 1, SDG 2, SDG 3 Yes Employment G4-LA1 Total number and rates of new employee hires and 64 PG 6, SDG 1, SDG 2, SDG 3 Yes employee turnover G4-DMA Management approach 58 PG 1, PG 2, PG 3, SDG 3 Yes Occupational health and G4-LA5 Percentage of employees represented in formal safety 58 PG 1, PG 2, PG 3, SDG 3 Yes safety and health committees G4-LA6 Rates of injury, occupational diseases and lost days 58 PG 1, SDG 3 Yes G4-DMA Management approach 61 PG 6, SDG 3, SDG 4 Yes Training and education G4-LA9 Average hours of training per year 58,61 PG 6, SDG 3, SDG 4 Yes G4-DMA Management approach 58 PG 1, SDG 3, SDG 5 Yes Diversity and equal G4-LA12 Composition of governance bodies and breakdown of opportunity 58 PG 1, SDG 3, SDG 5 Yes employees per employee category Equal remuneration for G4-DMA Management approach 59 PG 1, SDG 3, SDG 5 Yes women and men Category: Social – Human Rights G4-HR6 Operations and suppliers identified as having signifi- Forced or compulsory PG 1, PG 2, PG 3, PG 5, SDG3, cant risk for incidents of forced or compulsory labor, 68 Yes labor SDG 4, SDG 5, SDG 10 and measures taken Human rights PG 1, PG 2, SDG 3, SDG 4, grievance G4-DMA Management approach 33 Yes SDG 5, SDG 10 mechanisms
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External Aspect Description Page/Response UN initiatives Omission verification G4-DMA Management approach 33 PG 10, SDG 3 Yes Anti-corruption G4-SO5 Confirmed incidents of corruption and actions taken 33 PG 10, SDG 3 Yes G4-DMA Management approach 33 PG 10, SDG 3, SDG 16 Yes We do not make donations or Public policy G4-SO6 Percentage of employees trained in anti-corruption contributions to political parties PG 10, SDG 3, SDG 16 Yes policies and procedures (Business Principles) G4-DMA Management approach 67,68 Yes Supplier assessment for G4-SO10 Significant actual and potential negative impacts on impacts on society 68 Yes society in the supply chain and actions taken G4-DMA Management approach 51, 52, 54, 76 Yes
Consumer health and safety G4-PR1 Percentage of significant product and service categories for which health and safety impacts are assessed for 51, 52, 54, 76 Yes improvement G4-DMA Management approach 48 Yes Product and service G4-PR5 Results of surveys measuring labeling 48 Yes customer satisfaction Marketing communications G4-DMA Management approach 48, 49, 50 Yes G4-DMA Management approach 52 Yes In 2015, there were no substantiated Customer privacy G4-PR8 Total number of substantiated complaints regarding complaints regarding breaches of Yes breaches of customer privacy and losses of customer data customer privacy or losses of customer data. G4-DMA Management approach 33 Yes
Compliance G4-PR9 Monetary value of significant fines for non-compliance Telefônica Brasil received no fines or with laws and regulations concerning the provision and penalties for non-compliance regarding Yes use of products and services its products and services in 2015.
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Independent Auditor’s Limited Assurance (Institute of Social and Ethical 3000 (ISAE 3000) primarily consists operating and internal controls systems, Report for Annual Sustainability Report of Accountability) and internal control as of inquiries to Company management which served as a basis for the preparation Telefônica Brasil S.A. based on guidelines management determines is necessary to and other professionals thereof who of the information contained in the 2015 of reference guide G4 of GRI and Essential enable the preparation of this information are involved in the preparing the Annual Sustainability Report of Telefônica reporting option. free from material misstatement, whether information contained in the 2015 Annual Brasil S.A.; due to fraud or error. Sustainability Report as well as the The Shareholders, Board of Directors and application of analytical procedures to b) the understanding of the calculation Officers ofT elefônica Brasil S.A. Auditor’s responsibility obtain evidence that leads us to conclude methodology and compilation procedures — São Paulo – SP Our responsibility is to check the information on the form of limited assurance on the of indicators through interviews with contained in the 2015 Annual Sustainability overall information. A limited assurance managers responsible for preparing the Introduction Report based on the limited assurance engagement also requires the application information; We have been engaged by the management engagement conducted in accordance with of additional procedures, when the of Telefonica Brazil S.A. to present our the Technical Communication CTO 01/12, independent auditor becomes aware of c) application of analytical procedures on Independent Auditor’s Limited Assurance approved by the Federal Accounting Council matters that lead him/her to believe that quantitative information and inquiries on Report for the 2015 Annual Sustainability (CFC) and prepared based on NBC TO 3000 the overall information contained in the qualitative information and its correlation Report of Telefônica Brasil S.A., based on - Assurance Engagement other than Audits 2015 Annual Sustainability Report may with the indicators disclosed in the reference guide G4 of GRI for year ended and Reviews, issued CFC, which is equivalent have misstatements. information contained in the 2015 Annual December 31, 2015. to the international standard ISAE 3000, Sustainability Report; issued by the International Federation of The procedures selected were based on Company management’s Accountants, applicable to non-historical our understanding of aspects relating d) crosschecking of financial indicators with responsibilities information. Those standards require that to compilation and presentation of the financial statements and/or accounting The management of Telefonica Brazil we comply with ethical requirements, information contained in the 2015 records and/or press release. S.A. is responsible for the preparation including independence requirements, and Annual Sustainability Report 2015 and fair presentation of information that the engagement is performed in order and other work circumstances and Limited assurance engagements also contained in the 2015 Annual obtain limited assurance that the overall our consideration regarding areas with comprise the compliance with guidelines Sustainability Report according to criteria, information contained in the 2015 Annual possible misstatements. The procedures and criteria relating to AA1000 reporting assumptions, principles and indicators Sustainability Report is free of material comprised: framework issued by Accountability set in the reference guide G4 of Global misstatement. (Institute of Social and Ethical Reporting Initiative (GRI) and principles a) planning our procedures, considering Accountability) applicable in the preparation of rule AA1000 (Accountability Principles A limited assurance engagement the significance, volume of quantitative of the information in the 2015 Annual Standards 2008) issued by Accountability conducted in accordance with NBC TO and qualitative information and Sustainability Report.
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We believe that the evidence we have and judgments. Furthermore, we did obtained from our procedures is sufficient not perform any work related to future and appropriate to provide a basis for our projections and goals. conclusion in a limited form. Conclusion Scope and limitations Based on the procedures performed, as The procedures adopted in a limited described in this report, nothing has come assurance engagement are substantially less to our attention that causes us to believe extensive than those adopted in an assurance that the information contained in the 2015 engagement intended to express an opinion Annual Sustainability Report have not on the information contained in the 2015 been compiled, in all material respects, in Annual Sustainability Report. Consequently, accordance with the guidelines, principles and it was not possible for us to obtain assurance indicators established the G4 reference guide that we are aware of all matters that would ("Essential" reporting option) of the Global be identified in the assurance engagement Reporting Initiative (GRI) and the principles by that is performed to express an opinion. Had AA1000 Accountability Principles Standards we performed an engagement in order to 2008, issued by Accountability (Institute of issue an opinion, we might have identified Social and Ethical Accountability). other matters and possible misstatements that may exist in the information contained São Paulo, June 1, 2016. in the 2015 Annual Sustainability Report. Consequently, we do not express an opinion ERNST & YOUNG on this information. Auditores Independentes S.S. CRC-2SP015199/O-6 Non-financial data are subject to more inherent limitations than financial data, given the nature and diversity of methods used to determine, calculate or estimate them. Qualitative interpretations of materiality, relevance and accuracy of Luiz Carlos Passetti data are subject to individual assumptions Accountant CRC-1SP144343/O-3
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Credits_
GENERAL COORDINATION FOR THIS REPORT Executive Board for Sustainability and Responsible Management
MATERIALITY Gestão Origami
GRI CONSULTING, EDITORIAL & DESIGN COORDINATION Report Sustentabilidade
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